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For a long time, logistics have been taken for granted. Users have relied on the efficiencies of logistics providers to run lean inventories with “just in time” ordering. They have also counted on them being inexpensive. Additionally, in the past, consumption patterns were more predictable. The pandemic has upended all of this. For many clients, this has brought logistics and logistics contracts into the spotlight.
Starting with the third factor, consumption patterns have changed totally, and that has wrong-footed retailers. For example, following the closing of UK gyms in 2020, John Lewis launched Peloton concessions in nine of their stores. However, their regular logistics provisions were unable to keep pace with demand, forcing them to resort to more expensive air freight (reportedly more than 10 times the ordinary cost).
Due to COVID-19, changes in consumption patterns, and the closure of the Suez Canal in March 2021, the containership industry has been significantly affected. Containers have ended up in the wrong countries and there have been huge delays for containerships in places like Long Beach in the United States and Ningbo-Zhoushan in China. A record 100 ships of all types were at anchor or in holding outside the ports of Los Angeles and Long Beach, with 70 of them being containerships, including the 16,000 TEU CMA CGM Alexander von Humboldt and CMA CGM Jules Verne. In China, 154 containerships awaited loading off the ports of Shanghai and Ningbo, with delays arising from heavy export volumes, Typhoon Chanthu, and a two-week shutdown in August to quarantine dockworkers.
Consequently, ocean freight rates have seen as much as an eight-fold increase.
- Freight and logistics markets have been upended by the COVID-19 pandemic
- Disruption has included widespread container congestion, changing consumption patterns, and Suez Canal closure in March 2021
- Much of the passenger aircraft fleet, responsible for nearly half of all global air freight, has been grounded