Ocean FreighT COMPANY REVENUES INCREASED IN 2021 MORE THAN THE LAST 20 YEARS PUT TOGETHER
A headline says it all; “Ocean freight carriers made more money in 2021 than in past 20 years combined.’ The article, written by Robert Dalheim, and published in FurnitureToday, cited some
eye-opening statistics.
Inventory carrying costs increased 25.9% last year.
Spending on ocean freight increased by 23.6%.
Parcel delivery was up 15.6%.
3,113 CONTAINERS LOST AT SEA OVER THE LAST TWO YEARS
It has seemed like a lot of containers have been toppling overboard and sinking to the bottom of the ocean over the last two years. As it turns out, it wasn’t our imagination. 3,113 containers went overboard, almost five times more thanr the prior Three years.
We can blame much of it on the weather. I wonder, however, if the new high-capacity ships are part of the problem. For example, Chinese shipyards just launched the world’s largest container ship, the “Ever Alot.” How big is it? Its more than four football fields long (1312 feet) and can carry more than 20,000 twenty-foot containers.
The largest container ships stack containers 21 units tall. If the container is 9.5 feet high, the stack is almost 200 feet tall. That is hard even to visualize. It makes you wonder how stable those stacks are on rough seas, and how much they contribute to lost inventories.
Just In Time Manufacturing Is Giving Way to Big Inventories
For years, the world’s supply chain has underpinned the Just In Time philosophy of production. The idea was to lean on quick transport to avoid having to carry inventory.
That idea is beginning to seem antiquated as the world’s manufacturers and shippers deal with ports that don’t seem to get unclogged. Covid and the war in Ukraine have forced companies to stock up on goods to avoid having their products undergo long delays and outsized surcharges.
What are companies doing instead of following Just In Time practices? They are building or leasing more warehouses and moving from single to multiple factory sourcing.
