The giant of the seas sounds the alarm: another monumental traffic jam is brewing in ports and the supply chain

Everything indicated that after a complex end to the year for ports and supply chains in general, this 2022 was going to bring some calm for these infrastructures and exporting and importing companies. However, in a matter of weeks the situation has taken a 180 degree turn. The emergence of omicron and its high rate of infection threatens to make the problems of 2021 a joke. The first symptoms are already beginning to be noticed both locally (shortage of basic products) and globally (new delays in shipments, ports at half gas…).

Independent analysts, shipping giants, the European Central Bank this morning… there are several important institutions that are issuing a clear warning: ómicron has the ability to turn all international trade (also internal) ‘upside down’, generating supply problems in half the world.

One of the authoritative voices within logistics and particularly in maritime transport is the shipping company Maersk, the second largest in the world. From the Danish firm they have warned that the congestion of ports and terminals will continue to cause delays in supply chains, in addition to several important ports facing “particularly challenging” conditions.

forecasts are broken

“Unfortunately, 2022 did not start as we expected,” the company said in a notice to a client. “The pandemic is still strong and unfortunately we are seeing new outbreaks affecting our ability to move cargo. The issues remain significant as key ports in key regions are seeing new coronavirus spikes.”

A good example is the first congestions that are taking place in China in one of its most important ports. Ships try to avoid delays caused by covid in China are headed straight to shanghai, which is causing increasing congestion at the world’s largest container port.

Shipping companies are making this rerouting to avoid delays in nearby Ningbo, which has suspended some trucking services near that port after a Covid-19 outbreak, according to experts and shippers. Ships are also being diverted to Xiamen in the south, shipping data from Bloomberg.

Europe suffers too

In Europe, the density of occupation of the roads and transport channels that take cargo out of the ports is still very high, with longer wait times, which in turn generates delays for the companies waiting for the merchandise and congests the ports.

Bremerhaven’s North Sea terminal had an occupancy density of 130%, and Hamburg’s Eurogate and Maersk’s Maasvlakte II also reported a density of over 100%.

Most ports in northern Europe are reporting significant delays in ship calls, which can be up to four days. While in the UK, however, Maersk says that delays can be up to 10 days.

The latest bulletin from the European Central Bank also issues an important warning: uncertainty for 2022 remains very high. “Available survey-based information summarizing views of the business sector suggests that it is expected that The situation will remain difficult for most, if not all, of 2022.”

From the ECB they believe that ómicron has the capacity to weigh down the global recovery through supply, that is, generating new limitations on production. Consumers may be willing to spend, but on the other side of the counter they may not find what they are looking for or lack the help of store staff in the face of the wave of casualties that are occurring with this new variant of covid.

“New Interruptions”

“Looking ahead, the risks of further supply-side disruptions cannot be ruled out, especially if the pandemic situation intensifies. The new omicron variant has reignited concerns about an intensification of the pandemic on a global scale. Outbreaks may result in localized closures at ports or businesses, inducing more interruptions in production and shipping and, therefore, would act as a drag on activity and exert upward pressure on prices,” the ECB warns.

Not only the virus itself and its impact on sick leave, but also the new containment measures to limit its spread (for example, restrictions on mobility and international flights), as well as voluntary limitations, can again trigger a change in demand from consumers of services to goods, which would exacerbate supply bottlenecks.

However, another option or scenario that the ECB is considering, also negative for the economy, is that ómicron reduces the impetus of consumers (lower confidence): “If the general demand of consumers decreases in response, there could be some relaxation on global supply constraints, which appears to be primarily the result of strong demand.