Gina Cass-Gottlieb, the chair of the Australian Competition & Consumer Commission has pinpointed why the supply chain has been so disrupted these last few years. Ports, germs, and government restrictions, is the simple answer.
After first paying tribute the “invisible industry” of container shipping, which is a “clockwork-like system” that moves trillions of dollars’ worth of goods and drives the global economy, Ms Cass-Gottlieb then added: “at least it was until COVID-19 threw out global supply chains and caused highly visible delays, price increases and product unavailability”.
She discussed the causes of the supply chain disruption during the COVID pandemic.
“The major disruptions in 2020-21 were driven by a combination of worldwide factors including port closures and reduced staff, government restrictions, and the pandemic driving a surge in consumer demand towards containerised cargo”.
Commenting that these factors created a “logistical nightmare”, Ms Cass-Gottlieb noted that the “once efficient major overseas ports became the source of congestion and delays, disrupting shipping line schedules”.
As an aside, it worth noting that there have been many voices in the shipper and ports communities that have criticised shipping lines for delays and unreliability. Accordingly, it is worth re-iterating that Ms Cass-Gottlieb clearly pointed out it was ports that were the source of congestion and delay.
Shipping lines were unable to fully utilise their vessels despite deploying their entire fleets because “vessels were trapped for long periods of time in port waiting queues,” Ms Cass-Gottlieb explained.
The consequence was that the demand for shipping capacity massively outstripped supply. As cargo owners began “scrambling” to book capacity, the bid-up freight rates.
Again, as an aside, it is worth noting that many in the shipping community criticised shipping lines for making profits during this time and for the increase in rates. However, as Ms Cass-Gottlieb has made abundantly clear it was shippers who bid-up freight rates.
