Disruption Report #54: Supply Chain Challenges May Get Worse, Importers Accuse Shipping Lines of Price Gouging, and American Consumers Vote for Global Trade with Their Wallets

Investigation into Ocean Freight Carriers Over PricE-GOUGING

The New York Times headline reads, “American Importers Accuse Shipping Giants of Profiteering.” There are ten companies that are the major players in the ocean freight industry. Importers have complained to the Federal Maritime commission about what they see as monopolistic practices by the ten companies.

The article should be of particular interest to those who have suffered through unexpected freight price increases and having their containers left off container ships and even off-loaded at the last minute.

American importers — especially small and medium-size businesses assailed by disruptions to trade brought by the coronavirus pandemic — accuse the carriers of refusing to honor their contracts, denying them space on vessels and prioritizing shipments for larger and more lucrative customers like Amazon and Walmart.

American Importers Accuse Shipping Giants of Profiteering,” Peter S. goodman, the new york times, May 4, 2022

The article makes for a good read as it includes personal anecdotes. David Reich owns MSRF, a company that makes Easter baskets for major chains. See if his experience sounds familiar –

Last year, just as Mr. Reich was preparing for the holiday season, he discovered that his contracts appeared to guarantee nothing. On paper, Mr. Reich was guaranteed a minimum number of containers per year going from China to Chicago, at prices between $4,000 and $5,000 per journey…Yet over the past year, HMM, a South Korean shipping giant, has moved only nine of his promised 25 containers, while Yang Ming Marine Transport, a Taiwanese firm, has transported only four of 100 loads…T

The carriers refused to confirm bookings even when his company assented to special premium charges, Mr. Reich said. Facing calamity, he has been forced to pay prevailing market rates, spending an average of $15,000 per container.

American Importers Accuse Shipping Giants of Profiteering,” Peter S. goodman, the new york times, May 4, 2022


Global Trade Is Here to Stay; Just ask AMERICAN CONSUMERS

There has been a constant editorial drumbeat since the beginning of the pandemic and now amplified by the Russia – Ukraine war that global trade is in decline. Are they correct? I don’t think so. I feel that way because consumers are voting for global trade with their money, credit cards, and digital coins.

Here is a quote from Trading Econommics on the U.S. balance of trade for April 2022:

The US trade deficit widened sharply to a record high of $109.8 billion in March of 2022, as a broad-based rise in prices… lifted imports by 10.3% to a new record high of $351.5 billion… Exports also reached a new record of $241.7 billion but increased 5.6%, much less than imports. billion.

Trading Econommics,”

Global trade is going to stay around for awhile.

The Supply Chain Mess May Get Messier

GCaptain writers Brendan Murray, Ann Koh, and Kevin Varley think that, not only is the supply still a mess, but it might get messier. That is what they state in their article, “Global Supply Chain Crisis Round Two Could Be ‘Bigger Than Last Year’.”

They write:

Shipping congestion at Chinese ports, combined with Russia’s war in Ukraine, risks a one-two punch that threatens to derail the recovery, already buffeted by inflation pressures and headwinds to growth.

China accounts for about 12% of global trade and Covid restrictions have idled factories and warehouses, slowed truck deliveries and exacerbated container logjams. U.S. and European ports are already swamped, leaving them vulnerable to additional shocks.

The coronavirus quarantines in Shanghai and another 26 Chinese cities are forcing 180 million people to stay home and refrain from going to work, which directly impacts exports. That means no one who can drive the trucks or operate the ports.

The lockdowns do not appear to be going away soon, so things could, indeed, worsen.
We have to hope that either covid cases decrease in China or that the Chinese
government changes its quarantine policy.

If not, we could see significant challenges in getting products out of China this Spring and Summer. Sounds familiar doesn’t it.

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