The Suez canal blockage, which took place in 2021 and lasted for six days, also dealt a blow to the supply chain, which was broken due to the closures during the epidemic. The world’s most important trade route was blocked by the 224,000-ton Ever Given container ship. It has completely closed the gateway, which hosts 12% of the world’s ocean logistics and normally passes through 50 container ships per day. The Suez Canal, where one-eighth of the world’s ocean freight shipping takes place, is the shortest trade route between China, South Asia, and Europe.
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Impacts of the Suez Canal Blockage on Logistics in 2022
It’s been over a year since the Suez Canal blockage. However, its effects on the logistics sector continue.
1. A Shortage of Containers
The Suez blockade comes on top of the already ongoing container shortage crisis. Due to the broken supply chain, millions of containers are piled up in warehouses and ports in different countries, especially ships on transpacific lines. The shortage of containers caused by the break in the supply chain is still a big problem.
2. The Congestion Problem of Ports
Ocean logistics provides 90% of world trade. In 2021, many ports were closed, and millions of empty containers remained inactive in various parts of the world. Because the container-laden vessels can not be emptied, congestion problems still exist in hundreds of ports in 2022. Hundreds of ships, whose flow plan is still disrupted due to the Suez blockade, cause a conglomerate in ports that are not currently operating at full efficiency.
3. Soaring Shipping Costs
The closure of the Suez Canal is another deep blow to soaring shipping costs. Delayed containers cause an increase in container prices due to a supply-demand imbalance. The effect of spot freight rates on pent-up demand has grown exponentially. Between 5% and 10% of all oil shipments via ocean logistics are transported via Suez, so every day the problem persists, 3 to 5 million barrels of oil per day are delayed. The channel is also an important transit point for about 8% of global liquefied natural gas (LNG). These figures show that congestion, affecting energy flow, is causing international sea freight prices to rise.
4. Delaying Time for Loading and Unloading Cargo
After the blockade, the problem continues in world ports. Delaying time for loading and unloading cargo creates a domino effect. While the delays cause the deadlines to sag, the demand created by the cargo waiting at the destination ports causes the container prices to increase exponentially. The congestion at the ports, the delays in container unloading, and loading times continue due to the break in ocean logistics.
Logistics Management and Supply Chain Diversification
All these adverse impacts brought by this crisis will continue, showing that it is necessary to develop alternative ways for ocean logistics for the vulnerabilities that may be experienced in the future. The top priority is to realize ocean logistics processes within the stipulated time.
1. Carry out Logistics Management
l Proper Inventory Management
Proper logistics inventory management provides that the five pillars of logistics management, which are storage, shipping, tracking, network design, and planning, take place within your control. Inventory management allows companies to move efficiently throughout the supply chain, thus saving their time and money.
l Shipment Tracking
Container tracking enables instant tracking of each container transported by ships sailing worldwide. Fast recognizing a delay and predicting its effects on possible deadlines allows companies to act immediately to find an alternative solution. For example, organizing a limited air transport to compensate for a delay in ocean logistics ensures that stocks are not reset until the actual load arrives.
l Supply Chain Diversification
In the future, there will be more uncertainties. Companies must have multiple supply chain solutions in case one of them break down. Also, alternative shipment options allow companies to choose the most suitable option according to time and price priority and better respond to future delivery delays.
2. Choose a Reliable Supplier of International Freight Services
Undoubtedly, the Suez canal blockage was an unexpected accident, but the more preparation made in ocean logistics, the greater companies’ chance of being protected from similar crises. This is exactly why exporters, importers, e-traders, and all companies engaged in international trade need to choose a reliable supplier for international ocean logistics services, helping companies get the most cost-effective, alternative, trackable logistics solutions that minimize the risk of shipping delays.
Conclusion
The container crisis caused by the Suez Canal congestion reminds companies of the importance of international sea freight companies and proper ocean logistics management. Danspeed is a logistics company that offers logistics services from China to the world, especially the USA and Canada, specializing in ocean logistics and airway shipments and providing effective cargo services, including Amazon FBA shipments.
The company offers alternatives not only for export and import shipments but also for e-commerce sellers and those who want to receive personalized cargo transportation services. They are the best partner to help companies prepare for future shipping delays.
