Slowdown in consumer demand would put an end to shipping crisis

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One of the world’s largest port and terminal operators is warning that the global shipping and supply chain crisis leaving store shelves empty can only be resolved by curbing consumer demand.

Maersk-owned APM Terminal CEO Morten Engelstoft says the “vicious cycle” has been created by increased demand as container groups, suppliers and logistics companies struggle to deliver goods. He said.

In an interview with the Financial Times, the head of APM, the ports and terminals division of the world’s largest shipping group, said, “We have to look at how to break this virtuous circle.”

“We have to be lower [on consumer demand] Growth to allow time to catch up with the supply chain, or spread the growth differently. In the long run, we have to get efficiency back. ”

He admitted that a port requires more investment to improve infrastructure, but stressed that rising U.S. consumer demand is the cause of the strains on the system.

U.S. imports in July were up 20% year-on-year and 11.5% year-on-year, due to an increase in consumers, supported by economic stimulus measures since the second half of last year.

According to Engelstoft, the increase in the ratio of U.S. imports to exports has meant a much larger increase than in other regions.

“It’s a huge percentage. It’s so big that the bottleneck is port capacity, truck drivers, warehouses and even the effort to manage all the equipment.”

The crowded port has been affected by a global shortage of truck drivers and a shortage of warehouse space, leading to further delays in deliveries disrupted by the Covid-19 crisis.

Since the pandemic began, congestion peaked last week at the ports of Los Angeles and Long Beach in California. This is the main gateway for Chinese goods into the United States, where APM has a terminal.

Breaking February’s record, more than 40 container ships docked outside the port awaiting berthing.

U.S. and European retailers and wholesalers are also concerned about the possibility of supply disruptions during the peak holiday shopping season.

In addition, retailers are ramping up pressure by stocking up on Black Friday, the day after Thanksgiving in the U.S. in November, the traditional kickoff to the holiday shopping season. The pressure is unlikely to ease until 2022.

Alex Hersham, CEO of freight booking platform Zencargo, said demand could slow in February of the Chinese New Year, giving the shipping industry a chance to catch up on the unprocessed portion.

However, even with the slowdown, some executives warn that the need to recover depleted inventories will reduce the usual four- to six-week drop in cargo volume around Chinese New Year.

Brian Sondey, CEO of Triton International, the world’s largest container leasing company, said the amount of containers was “too large to liquidate during that period.”

“The industry consensus is that the situation is unlikely to settle until next year,” he added.

Consumer demand must give way to end supply chain crisis, says Maersk exec Source link Consumer demand must give way to end supply chain crisis, says Maersk executive.

Source California News Time

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