It’s not every day that a giant boat gets stuck in the sand, wedged between the borders of a body of water. Given today’s sophisticated navigation systems, it sounds almost cartoonish. So when news of a stuck cargo ship in late March of 2021 hit the airwaves, it caught quite the stir. A 1,300-foot 220,000-ton container ship called The Ever Given got itself grounded in the narrow passageway (called the axial artery by the Egyptian president) prompting experts to wonder what on God’s good earth was happening. Authorities and engineers rushed to figure out the best way to dislodge the ship. (It’s quite the task to move a 220,000 monster). It took them about a week before they managed to get the ship back on track and unclog the busy waterway that is home to significant trade traffic. The congested canal saw how hundreds of other cargo ships had to wait for the traffic jam to clear. It was a stark reminder of just how fragile global supply chains are and how the goods we enjoy every day often depend on a million things going right.
The Fragility of Global Supply Chains in 2021
The day that the Ever Given was unbeached to the applause, fog horns, and celebratory cheers of the Egyptian authorities, business continued as usual. “She’s free!” an official involved in the rescue mission exclaimed. The ship is one of the largest in operation today and photos of the vessel will provide an idea of just how massive this ship was, as hundreds of shipping containers are visible from its surface.
It’s been quite a year for trade. The global supply chains experienced whiplash from several events from changing trade policies in the previous administration, tariffs, unexpected world shutdowns and then reopening, surging demand, shifting markets, and the impending inflation. The toilet paper shortages in mid-2020 also revealed just how easily global supply chains are disrupted and apt to cause chaos for consumers and communities. During this time, price fluctuations of several goods—including PPE and other medical supplies— were changing so fast that it was difficult to put a finger on the pulse of the market.
#1 Shipping Container Gets Lodged in the Suez Canal
The above story of the beached cargo carrier ranks as #1, as it disrupted hundreds of other cargo carriers from reaching their destination on time. The Suez Canal connects the Mediterranean and the Red Seas, serving as a major trade route in the area.
#2 Shipping Container Shortages Add to Uncertainty
You know them when you see them. The characteristic shipping containers that many DIYers and self-starters began turning into homes not long ago. Who would have thought these hunks of steel would cause the global market to break a sweat in 2021. As reported by Bloomberg in March of 2021, the world’s biggest makers of these shipping containers were struggling to meet demand early in the year. These containers are responsible for the transportation of up to 90% of goods and services across the globe. A trade boom that hit after the pandemic caught many of these companies unprepared.
Automakers have experienced similar issues. In 2020, many made a decision to scale back on computer chip orders in 2020 fearing a catastrophic economic slowdown. As it turns out, spending on cars and homes continued to be pretty resilient in the U.S., which has now caused a backlog in production of new vehicles.
#3 Plastics in Modern Trade and Supply Chains
Global supply chains are also experiencing another rough patch when it comes to plastic. Harvard Business Review reported in March of 2021, that supply disruptions of several essential plastic products are causing several industries to worry. The raw materials causing concern include polypropylene (PP), polyethylene (PE), monoethylene (MEG). These plastics are ubiquitous in commonly used products: smartphones, toys, food packaging, home appliances. COVID-19 precautions and factory closures also led to the production of some of these essential materials to cease, causing a ripple effect across several industries. In addition to this, extreme weather like the winter storm that hit Texas in February affected plants that turn oil and byproducts into plastics.
Experts that study the markets and supply chains are skeptical of what’s to come as people come out of their humble abodes -vaccinated and ready to spend- and shortages in several fronts cause chaos, inflation, and more supply disruptions.
The Need for Resilient Supply Chains and Trade Policies
As happens in life, the revelations from the chaos of 2020 and 2021 have exposed some of what can be improved when it comes to building resilience within supply chain capabilities. The flow of goods is intricately tied to a country’s economy and ability to produce what it needs to produce and/or provide needed materials. Importers and exporters of goods are always having to adjust to the change in regulations.
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Here at RM Customhouse, we are at the frontlines of the trade war and chaos. As administrations change and policies change, so do trading policies, tariffs, fees, and so forth. That’s why we’re here. If you’re looking for a customs broker to guide you through the confusing customs regulations, we’re here to help.
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