What’s the Holdup?

“Why are so many items out of stock?” “Why do lead times keep getting pushed back?” These are the questions customers are asking more than ever these days. Around the planet, the pandemic has disrupted trade to an extraordinary degree, disrupting the shipping of goods and adding a fresh challenge to the global economic recovery. The virus has thrown off the choreography of moving cargo from one continent to another. At the center of the storm is the shipping container, the workhorse of globalization.

Americans stuck in their homes have set off a surge of orders from factories in China, much of it carried across the Pacific in containers, the metal boxes that move goods in towering stacks atop enormous vessels. As households in the United States have filled bedrooms with office furniture and basements with treadmills, the demand for shipping has outstripped the availability of containers in Asia, yielding shortages there just as the boxes pile up at American ports.

Shipping vessels bearing goods to unload are frequently stuck for days in floating traffic jams. The pandemic and its restrictions have limited the availability of dockworkers and truck drivers, causing delays in handling cargo from Southern California to Singapore. Every container that cannot be unloaded in one place is a container that cannot be loaded somewhere else.

Just when we thought things couldn’t possibly get any worse, the 1,300-foot Ever Given container ship got wedged in the Suez Canal blocking traffic in both directions for almost a week. Now the backup in the canal is expected to reverberate through supply chains for months. The traffic jam making headlines across the globe blocked hundreds of ships from the waterway, a critical lane in Asia-Europe shipping that accounts for some 13% of global maritime trade, and sent some vessels on a longer path around Africa to avoid the backup. Logistics operators are bracing for a cascade of sea containers that bring new congestion to supply chains as shipping networks work through backlogs from the Suez Canal blockage.

The Suez blockage raises important questions for manufacturers and other exporters who will have to pay closer attention to the availability of equipment and transportation when they seek overseas sales. Companies need to weigh such factors in the same way they consider production or raw materials constraints. When containers and ships aren’t in the right place, finished goods can stack up at factories designed to hold inventory for short periods while retailers risk missing out on key selling seasons.