Supply bottlenecks affect all industries globally. The most worrying is container shipping, which today costs 224% more than last year.
There are no longer enough containers for everyone
One of the legacies of the covid-19 slowdown was that, faced with falling demand, many logistics companies, and in particular shipping lines, also reduced their operations. When the world came out of its forced lethargy, demand resurged in many parts of the world at the same time, and the shipping system was not prepared to respond to this reactivation.
This was compounded by the temporary closure of ports and factories in Asia, where much of the containers are produced, and also by a shortage of workers. If we take into account that around 80% of the goods we consume in the world are transported by sea, the problem we have is enormous.
However, this is not a new problem, it was aggravated by the pandemic, but it was already visible 2 years ago with certain indicators:
- Lack of manpower
- Increase in the cost of raw materials (fuel, electricity, etc.).
- Worsening transport conditions
- Strategic alliances between the shipping lines themselves
Supply bottlenecks
The pandemic and the months of confinement have left a heavy burden on industries, the most worrying of which is the difficulty of resuming normal production rates in companies.
This problem, which directly affects supply rates that still do not resemble those of demand, leads to delays in deliveries and supply problems at a global level. A clear example is the 2 months you have to wait to buy a bicycle or the 9 months for a car. A situation that is transferred to toys and video games for the Christmas season, whose products have been out of stock for months or with a low stock capacity.
The triggers for this situation can be attributed to the following reasons:
- Drying up of production
- Lack of workers
- Excess demand
- Rising prices for essential goods
- Rising prices for electrical and plastic equipment
Rising prices of raw materials
In all this puzzle, the rise in the price of electricity and practically all raw materials has not helped. In Spain, the energy market is at record highs, while industry has seen its cost forecasts derailed by the exponential increase in aluminium (40%), copper (63%) and other metals (17.6%), as well as wood, paper and other components. Other essential goods for industry such as magnesium are likely to run out before the end of the year, as indicated by the German metal producers’ association.
The most visible face of this shortage is undoubtedly in semiconductors, which is having a strong impact on the automotive industry. The latest figures show a 21.5% drop in car production in Europe in 2020, from 21.7 million vehicles in 2019 to 17 million last year.
The brands are talking: German carmaker Volkswagen will stop producing 600,000 cars later this year, while Stellantis says they have stopped producing the same amount of cars, but only in the last 3 months.
As if this were not enough, in the midst of a green transition towards shared, sustainable and smart mobility, experts and the CEO of one of the main electric vehicle brands, Tesla, have acknowledged that in the near future there will not be enough batteries for everyone, which would trigger a new supply crisis directly affecting electric vehicles and everything that goes with it.
In this scenario of huge shortages, it is more necessary than ever to focus on the relocation of strategic industries such as semiconductors or metals, while working on a more transparent and flexible supply chain, which allows reliable forecasts to be made and to react to peaks in demand in a more agile way.