News / Demand May Not Recede Until Late 2022

Demand May Not Recede Until Late 2022

24 January 2022 - by - in Industry News
cargo ship that says Evergreen

cargo ship that says Evergreen

Handling your business’s logistics has never been more difficult. The shipping industry is a mess from port closures and increased shipping prices to labor shortages and COVID-19 lockdowns. Unfortunately, it may be a while before we see things start to settle down. Today’s article will go over why it may take until late 2022 for us to start seeing a substantial change in the shipping industry. 

Prices

If you handle your business’s logistics, you already know how insanely high shipping prices are. Shipping companies raise the price of their shipments to lower demand so they can get their logistics back on track. Unfortunately, this tactic doesn’t seem to be working. Despite the rise in prices, demand for domestic freight shipping services is still at an all-time high. 

This is a worst-case scenario for consumers as it means long wait times for shipments and higher prices. On top of that, some importers have asked the Federal Maritime Commission (FMC) to step in and act on the rates being charged. However, FMC chairman Daniel Maffei told American Shipper that the FMC had not found any evidence that the alliances are manipulating prices and the market is simply dictating higher prices. 

The Impact of COVID-19

The coronavirus has left a lasting impact on the entire world. As we continue to navigate our way through these choppy waters, the logistics and shipping industries continue to struggle. COVID lockdowns and port closures due to outbreaks affect the global industry even if the port closure happens somewhere halfway across the globe. 

Daniel Maffei shared that the FMC recommended that longshoremen get vaccinated because of their importance to the global economy. Even with an increase in vaccinations, ports worldwide are dealing with lockdowns or closures as new variants of the pandemic pop up. Since the port system is already under stress, if another port anywhere in the world closes down or becomes unfunctional, it will further stress the US system. 

Stress on the System

As mentioned above, the American shipping system is under constant stress due to issues in the global supply chain. This is especially bad since the United States is facing a prolonged period of high consumer demand and strained supply. Experts worry that this can return the system to where it was during the beginning of the pandemic. 

It’s not like people aren’t trying to alleviate some of this stress. Ports in Los Angeles and Long Beach have increased capacity, but they don’t have enough rails or warehouses to keep up. This just goes to show how overwhelmed the system is. Maffei suggested that more transparency among the ports and carriers can help add capacity. 

Labor Shortages

Another glaring problem is that labor shortages are rocking every industry, including the shipping industry. This makes it difficult for these shipping companies to meet time-critical shipping needs. The workers who are there are overworked and unable to meet the strenuous demands. 

The worker turnover rate is astronomically high in every industry. Some workers are afraid of contracting coronavirus and are choosing not to work. While others workers are asking for higher pay due to increased demand and the risk of contracting the coronavirus. As labor needs are met, shipping companies will have an easier time meeting demand. 

Let Us Handle Your Logistics Needs

It’s a difficult time to try and manage logistics. Our team here at Trifecta Transport is here to handle your logistics needs, so you don’t have to. Contact us today to find out how we can make your life easier.