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SUMMER 2022

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Distributor's Link Magazine Summer 2022 / Vol 45 No 3

10 THE DISTRIBUTOR’S

10 THE DISTRIBUTOR’S LINK Chris Donnell Chris Donnell is the National Sales Director for Scanwell Logistics International (CHI) Inc., specializing in Supply Chain Management, Inventory Control, Logistics Sales and Management. Chris excels at selling the “Solution” to advanced program analysis and implementation. A highly ambitious and effective team leader who thrives on the challenges of this industry, Chris currently oversees a National Sales and Partnership Program consisting of more than 100 Sales executives who focus primarily on SCM and Logistics development in most vertical markets. Contact Chris at 847-228-6789 or email: chrisdonnell@scanwell.com. THIS THREE-YEAR SHIPPING NIGHTMARE IS FAR FROM OVER Reflecting back on a year ago, the talk of the town as we headed into the summer months was that our fragile global supply chain would bounce back in the latter part of 2021. Boy was that wrong. Today, and many things on the horizon could make the past two years look like a walk in the park. The more I speak with people it becomes painfully obvious that there is a great deal of disinformation out there. I will take this opportunity to highlight several of the more critical issues that importers, manufacturing and distributors should be on the look-out for as these will certainly have an impact on all product moving into, out of, and throughout the United States. One of the more pressing issues involves the current situation in China and the pandemic “Zero Covid” policy. Pursuant to a recent article I read, there are more than 45 cities consisting of more than 380 million people in China under some form of quarantine. Most significantly this impacts China’s most populated city, Shanghai. For the past seven weeks, the city of some 28 million people and its impressive port complex which moved in excess of 47 million TEU’s (twenty-foot containers) in 2021 has been severally hampered by strict government lockdowns. This has led to just a trickle of imports and exports moving and manufacturing has ground to a halt. To put this in comparison, the Los Angeles/Long Beach complex, the United States’ busiest ocean terminal complex, only moved 18 million TEU’s yet handles roughly 40% of all containerized cargo into the United States. CONTRIBUTOR ARTICLE The lockdown has dramatically impacted the flow of goods globally, and nowhere is it more obvious than the flow of cargo into the Southern California terminal complex where congestion has improved since the lockdown. As of today, the terminal complex is reporting that approximately 40 vessels are sitting idle, whereas just 4 months prior they were setting records of over 100 vessels - so there has been some significant gains in that respect. While this is positive momentum, once manufacturing returns in China to pre-shut-down levels, and once truckers are mobile and have the ability to move goods fully to and from the port of Shanghai, we’re going to relapse into the same scenario we saw in mid- 2021 as the surge of goods from China starts hitting our shores. Congestion could potentially surpass the peak of 2021 where vessels are sitting off shore for weeks before being birthed and unloaded. Make no mistake, the shutdown has provided some of our ocean terminals a brief yet needed respite from the constant congestion battles unfortunately it won’t last? We have also seen ocean rates start to slide. On average, ocean costs have come down 3% to 5% over the past month but are still about 150% higher than they were pre-pandemic. Once China returns from its current lockdown state, capacity will inevitably become non-existent and rates are going to rebound back up to where they were in late 2021. Smaller ports throughout the Pacific Rim are going to see their carrier allocations eliminated or the carriers will simply bypass them in order to dig out the world’s busiest port. CONTINUED ON PAGE 98

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