The global shipping crisis and labor shortages may get worse because of the slow vaccine rollout for seafarers, say experts

Container ship
Slow vaccine rollouts for seafarers risks worsening the existing worldwide shipping crisis.

  • A slow rollout of COVID-19 for seafarers risks worsening a worldwide shipping crisis.
  • Infections on vessels are rising, which could further harm already strained global supply chains.
  • Shipping experts warn of delays and a tightened labor pool leading up to Christmas.
  • See more stories on Insider’s business page.

A slow rollout of COVID-19 vaccinations for seafarers is proving problematic for the beleaguered shipping industry, according to experts.

When outbreaks occur on ships it can endanger marine works and cause further disruption to trade, Bloomberg reported.

Despite efforts to vaccinate seafarers in ports, most are still largely dependent on their home countries to be vaccinated – and more than half of the 1.6 million maritime workers globally come from developing countries such as India, the Philippines, or Indonesia, the outlet reported.

ICS estimates only 35,000-40,000 seafarers are vaccinated – 2.5% of the global pool of maritime workers.

“Supply chains are already stretched from a robust bounce back in consumer demand, semiconductor shortages, and shipping difficulties such as the Suez Canal blockage and Chinese port closures,” Tom Fairbairn, a shipping expert, told Insider.

According to the WHO, more than 80% of global trade by volume is moved by maritime transport. The global economy depends on the world’s two million seafarers who operate the global fleet of merchant ships.

Illness and economic hardship remain a serious problem for these workers amid the pandemic.

A new report by Thetius and sponsored by Inmarsat discussed the future of seafaring, as well as the current problems. It stated: “2020 showed the collective ineffectiveness of the entire shipping industry, including charities, corporates, unions, and even international bodies such as the IMO, to act as a voice for the needs of seafarers during a crisis.”

It added: “Governments around the world have repeatedly failed to act on the crew change crisis, which still exists at the time of writing.”

In May, a seafarer died and several medical workers in Indonesia were ill with the delta variant of COVID-19 after a ship with an infected Filipino crew docked in Central Java on April 25. Around the same time, the shipping industry endured more chaos after an outbreak at one of China’s busiest ports in the province of Guangdong triggered a backlog of shipments at four major ports.

Situations like this are worsening the existing worldwide shipping crisis, which has raised costs and led to shortages of many products, from chicken to semiconductors, as a result of the pandemic, Insider’s Rachel Premack reported.

In an interview with Bloomberg, Esben Poulsson, chairman of the International Chamber of Shipping (ICS), which acts for shipowners said: “With this new delta strain, there’s no doubt it’s setting us back and the situation is getting worse. Demand for products isn’t letting up, crew changes aren’t happening fast enough and governments continue to stick their heads in the sand.”

The forecast growth in the world merchant fleet over the next decade, and its anticipated demand for seafarers, will likely continue the trend of a shortage in the supply of officers, according to the ICS.

This is why Fairbairn warns: “Those down the supply chain must be prepared for further disruption in the critical run-up to Christmas.”

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This is how the shipping crisis ends

Beached Cargo Ship Raises Pollution Fears Off The Devon Coast
The world is in a shipping crisis that’s making everything more expensive.

I have unfortunate news. The world’s shipping crisis that’s making everything more expensive (or just impossible to find) is probably going to ruin your Christmas.

That’s because industry experts and company executives say the shipping crisis will continue through 2022.

It’s good news for ocean shipping magnates. Ocean rates are currently “spiking,” according to Eytan Buchman, the chief marketing officer at global freight booking platform Freightos.com.

The price to send a shipping container from East Asia to the west coast of North America is nearly 1.8 times higher than it was at this time in 2019. To send one to the east coast, it’s 2.1 times more expensive.

rising cost of freight
It’s becoming more and more expensive to move goods from Asia to the US.

But everyone else should prepare for several more months of frustration. We’ve already seen unexpected reverberations from the shipping crisis: skyrocketing freight rates have caused some pet food to vanish from shelves; a semiconductor shortage has idled auto factories; and chlorine shortages are disrupting pooltime dreams.

A quick and zesty explainer on our shipping calamity

Cargo ships move around 80% of global trade by volume. But a variety of factors is complicating the process in which containers full of factory-fresh goods – usually in Asia – are loaded onto ships, traverse the ocean, and are unloaded in, say, the ports of Los Angeles or Newark.

What’s causing our shipping crisis include sweeping trends and more quotidian factors. A decades-long movement in the ship-building industry to make massive ships is clashing with the fact that many of our ports can’t accommodate these behemoths. Since early last year, when consumers worldwide were trapped at home, demand for durable goods skyrocketed – we started buying more stuff because we couldn’t go out to eat or travel.

Amazon France warehouse
This is an Amazon warehouse in France in 2000, back when Jeff Bezos was mostly just a humble bookseller. Ah, the good ol’ days!

And shipping containers are also a hot commodity right now. As Chris Stauber, vice president of product at transportation visibility platform FourKites, explained to me, the makers of shipping containers decreased their output in 2019, a slow year for trade, and early 2020, when the coronavirus squeezed industrial production. Now we need more containers than ever, and manufacturers are struggling to catch up with demand.

Labor trends are also making the shipping crisis even more challenging. At the port of Yantian, one of the largest in the world, a coronavirus outbreak stymied work for weeks. Supply Chain Dive reported on Thursday that 67 vessels were waiting to dock there earlier this week. Now resuming normal operations, the port has a massive backlog of 160,000 containers to process.

Thanks to these delays, which cause even more delays down the line, ocean vessels are waiting days at ports around the world just to get unloaded. For example, wait times at Yantian surged from 0.5 days to 16 days this month.

Please stop buying stuff

Of course, one cannot snap their fingers and see smaller ships or much-improved ports within a year (or even several years). New containers or widespread vaccination could ease our shipping crisis a bit quicker, but the timeframe would still be a problem for your Christmas shopping.

Instead, experts point to another factor that untangle the shipping chaos: Less demand.

Retailers’ inventories, which are the goods a business has in its warehouses to restock the shelves, do not match how much consumers are buying right now – even though inventories are back up to pre-pandemic levels. Companies have the same amount of goods in their stockrooms as before the pandemic, but even that isn’t enough to keep up with how much stuff people are buying.

Per the latest monthly US Census Bureau data, all retailers (excluding motor vehicle and part dealers) are seeing an inventory-to-sales ratio of 1.04. In previous years, retailers had a wider margin between their inventories and how much consumers were buying; in April 2017-2019, the ratio hovered around 1.22.

Throughout the next few months, retailers typically stock back up on what they need for the holiday shopping season. In 2019, as Michigan State’s Jason Miller, an associate professor of supply chain management, wrote in an analysis shared in American Shipper, retailers increased inventories by $35.12 billion from April to October. This year, Miller wrote that retailers need to add $65.11 billion to be ready for this year’s peak season – nearly twice as much!

It’s this stock-up that makes experts say that the shipping crisis won’t clean up this year.

As Paul Bingham, director of transportation consulting at IHS Markit told American Shipper, “We’re too far into the year without having recovered (inventories) to get out of this in 2021. We have to look to 2022 for any hope. So many portions of the supply chain are so far behind that it’s not going to happen in the next six months.”

What about next year?

There are plenty of caveats, but the folks who run Big Shipping believe the insanity will slow down by next year.

Forecasters believe folks will buy less stuff as the world re-opens and vaccination rates climb, instead spending their money on services like travel and dining out. This will give importers and exporters a chance to catch up on orders.

This photo taken on August 7, 2018 shows workers unloading bags of chemicals at a port in Zhangjiagang in China's eastern Jiangsu province
A 2018 photo of workers at a port in Eastern China unloading bags of chemicals. Yum!

Lunar New Year, which typically occurs in January or February, should also provide a respite. During that holiday, many factories in Asia shutter as workers travel home to celebrate. Trade volumes fell by one third during the 2020 Lunar New Year in February.

Triton International claims 28% of all leased shipping containers, making them the No. 1 player in the container leasing space. Triton CEO Brian Sondey told investors on an April earnings call that a slowdown in trade volumes is needed to untangle the shipping crisis. He expects that to hit after the Christmas inventory build-up in 2021.

“What we hear is that most customers don’t think these bottlenecks are going to evaporate quickly, but they also don’t think they’re necessarily permanent,” Sodney said.

He added, “I think our general view is it likely continues until trade slows and that – who knows exactly when that’s going to be, but I think probably the betting is sometime end of this year, early next year when maybe the trade world starts to get back towards normal.”

In other words: Once we stop buying so much stuff, we should see the shipping crisis abate. But to prevent another catastrophe, government leaders will have to take the hint and start building better ports.

When do you think the shipping crisis will end? How has the crisis affected your business or in-store experiences? Email rpremack@insider.com.

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