The climate in the manufacturing industry has been affected by a variety of events, not the least of which is the COVID-19 pandemic. The problems filter down within the industry, including supply chain and shipping issues. When many companies were closed because of lockdowns, both essential and non-essential manufacturing were also affected. Manufacturing plants depend upon the availability of shipping containers, and if they are in short supply, products cannot reach customers.
The Shipping Container Buzz
You will find shipping containers frequently piled on ships ready to depart to various locations around the world. This wasn’t always the case, however, as goods were initially shipped using wooden crates, pallets, boxes, barrels, or even simply wrapped in sheets. It wasn’t until the 1950’s, when a road hauler named Malcolm McLean, came up with the idea to create a standardized shipping container, which shaped the future of moving goods between countries. After nearly a decade of use, international railways and shipping companies decided on a new standard size for these containers and that standard is still used to this day. Presently, these essential containers have made globalization possible but certainly suffered drawbacks when they faced traffic jams in ports during the height of the pandemic. These backlogs choked the economy and showed manufacturers and economists how important they were to the manufacturing industry.
Life Before Containers
The price manufacturers had to pay for shipping was extremely high before the introduction of containers. The reason for this expense was because the goods needed to be loaded on each ship separately. A typical ship in the 1950s era may have 200,000 different products on board, and when the ship arrived at the destination port, each needed to be removed separately. Needless to say, the process of loading and unloading was quite timely and resulted in a great deal of damaged, lost, and stolen cargo.
The Supply and Demand Factor
The global pandemic started over two years ago—March 2020—and since that time we have seen an increase in supply and demand. People have been buying more goods than they did previously, and based on the law of economics, when the demand for goods increases, so does the cost. On the other hand, this has caused a shortage in the number of available shipping containers, which has sent their prices soaring. In the past two years, the price for containers has quadrupled in cost, with some months showing even greater increase.
Why There Is a Container Shortage
Everyone wants to know where the problem is with deliveries, why stores are running out of products. Customers want to know why it takes so long for their deliveries to arrive and when it is going to end. The problem relates to the supply chain crisis, not a problem within the manufacturing industry directly. The shortage of containers exists because many of them are loaded onto ships that are waiting outside ports. The delay causes problems throughout the entire supply chain: manufacturers can’t get the raw goods they need to make the goods and parts for other businesses. Adding to the problem is that the USA imports more than they export, so once containers are emptied in the USA, it can take a long time before they are full enough to merit shipping back to foreign lands. This backlog within the industry affects everyone from those needing the raw goods to those needing the products made from those raw goods.
We have ships waiting in ports with products necessary to keep economies running, yet they are unable to unload them for products and supplies to reach their final destination. The entire crisis within the supply chain affects everyone–it filters right down to the consumer–you and your next-door neighbor.