International Shipping Chaos

 

With the Ever Given getting stuck in the Suez Canal and holding up nearly 400 ships, my interest in the complexities of global shipping has peaked.  It started when our daughter got her job in charge of shipping with a fruit processing company in B.C.  Her company routinely imported or exported fruit and fruit products to and from Chile, New Zealand, Australia, and occasionally Europe (before the pandemic).  Now it's anything but routine!

The Ever Given** being freed in the Suez Canal.

I've learned from her a tiny bit about the complexities involved, and all the paperwork needed.  A slightly different set of rules in the U.S. (for example about food safety) can hold up a shipment for weeks before it gets trucked on to Canada.  Imagine sitting at a desk in B.C. arranging a shipment of something from eastern Europe, across Europe by train, across the Atlantic by ship, across the U.S. by rail and across the border by truck.  And each step requires its own paperwork.  Add the pandemic to this mix and as I said it's anything but routine!  The Ever Given getting stuck in the Suez Canal is just another blip in the mess.

I should say before I try to explain what I've been reading, that almost all consumer goods are shipped in containers these days - 20 or 40' foot steel boxes (with some small variations) that can be transferred from ships to trains to trucks interchangeably.  Containers have totally revolutionized modern shipping.

As some of the articles I've now read have described it, there's a 'perfect storm' of problems coming together to cause chaos in global shipping at the moment.  Shipping costs are soaring.  One company in Europe reported paying $14,000.00 for a container shipment compared to $2000.00 just 6 months ago!  Eventually these costs will get passed on to consumers.

To try and explain this, let's use an example.  Suppose you buy a new exercise bike (or laptop or car or camera, etc.) from your local store.  The store has to order it from their supplier who orders it from the manufacturer in China (most consumer goods come from China these days).  That factory is also dependent on parts to build the bike, and the factory that builds the electronic components is shut for two weeks because of the virus.  

Eventually the parts arrive and the bike gets put together, ready to be shipped.  But they can't get a container because those are sitting empty somewhere else in the world.  China starts sending ships to the U.S. to simply pick up empty containers, which of course costs more.  Then your bike gets packed in a container and trucked to the port (85% of consumer goods are shipped by boat to their destination).  Let's hope you get lucky and there are no delays in getting it on the next ship sailing for your port, probably Vancouver in Canada.

Containers sitting at a Chinese port.

But once the ship arrives in Vancouver it finds a traffic jam of ships waiting to be unloaded, all floating in Burrard Inlet waiting their turn.  It might be that some dockworkers are off ill, or forced to quarantine for two weeks, or off for an extended time to oversee their children doing online learning.  So the container terminal is facing a variety of delays.  Then once your bike does get unloaded the store has to arrange transport from the terminal in Vancouver to your local store.  It's easy to see how delays accumulate along this chain and retailers are left with unhappy customers.

And we haven't talked yet about the paperwork.  At every step of this supply chain there is a cost, from manufacturing through trucking to dock fees and shipping, to dock fees and trucking at the other end of the trip.  Each needs a piece of paper.  That's to say nothing yet about customs declarations and fees, and all the other paperwork that might be required, such as food safety certificates, and concerns over human rights, environmental sustainability, etc.   And have I mentioned language differences? 

Now add to this two more dimensions, different products and different jurisdictions.  Oranges in Florida and apples in Chile face different rules on both counts, and jurisdictions have a habit of changing their rules abruptly.  You can see how this multiplies the complexity quickly.  There are of course short-cuts.  The simplest is to hire a freight forwarder, who arranges all this, or part of this, for you, a very common practice.  It's still complex enough and changeable enough to leave our daughter frustrated a lot of the time!

In the case of the shipments our daughter typically arranges, refrigeration is often involved, so the container needs to be plugged in when it's sitting at the container terminal, but there are only so many available spots that allow for that.  It's not a simple matter of a factory making your exercise bike, and you buying it!

Thanks for sticking with me if you've actually read this far.  I hope I've shown you a few of the complexities involved in modern shipping.  Tomorrow I'll tackle the 'big picture' of this topic, and look at the impact the pandemic has had.

** You may be confused over the ship's name.  The ship is the Ever Given.  The large lettering of Evergreen on the side of the ship is the Taiwanese company that operates it, one of a fleet of nearly 40 ships.  Over half of the ships have names starting with the word 'Ever', including Ever Goods, Ever Giant, and this one, Ever Given.  You can see the name on the bow of the ship below.  This is one of the new 'Ultra Large' class of container ships.