Ocean Shipping and Global Supply Chain Disruptions - Recap of 2022
2022 was another tumultuous year for the ocean shipping industry. The combination of numerous disruptions ranging from geopolitical conflicts, Covid-19 lockdowns, industrial labor strikes, inflationary pressures, and extreme weather events gravely impacted ports worldwide and global supply chains.
Amid these challenges, customers have learned much more about the processes involved in moving goods from the manufacturer across the oceans and into stores. Prior to the pandemic and its related disruptions, most customers never gave much thought to the shipping sector. These disruptions have undoubtedly revealed the interconnectedness and complexities of the ocean shipping sector, and how integral it is to the global economy.
Despite these disruptions, the ocean-container shipping market in 2022 experienced a significant improvement or reduction in the number of disruptions in global supply chains compared to the huge surge in 2020 and 2021.
Supply chain pressures dropped significantly during the 2nd half of 2022. This can be seen in the reduction in ocean freight rates in 2022 although they are still above the pre-covid average rates. Global schedule reliability has improved and reached 56.6% (according to sea intelligence) compared to 30% at the beginning of 2022. Transit times for ocean container shipping have decreased from 70 to 80 days to 60 days on average, which is an improvement but still longer than the Pre-Covid averages of 40 to 45 days. In 2022 a lot of the trade flow was pushed to the 1st half of the year and as a result, the 2nd half was muted with less congestion and delays during the end-of-year expected peak season.
Here’s a recap of some of the major disruptions that defined supply chains in 2022.
Wave of Port Labor Strikes Across Europe
Throughout Europe, repeated industrial strikes contributed to supply chain disruptions in 2022. The following ports experienced the brunt of these strikes: Antwerp, Rotterdam, Felixstowe, Hamburg, and Bremerhaven. These strikes caused widespread disruption, leading to increased costs and trade delays, and congestion.
Truckers and Rail Workers Strikes
The South Korean truckers' union went on two strikes in June and November 2022 disrupting operations at the port of Busan and in the steel and manufacturing industries. California truckers stage protests in July 2022, halting traffic at the ports of Los Angeles and Oakland.
Read about supply chain incident events
Russia's Invasion of Ukraine
The invasion of Ukraine by Russian troops at the beginning of 2022 led to multiple fast-changing developments in the shipping industry. The invasion initially led to the closure of all seaports in Ukraine and carriers announced the cancellation of port calls through most ports in Russia and Ukraine. This eventually resulted in vessel routing constraints, port congestion, delays, and freight rates skyrocketing passing record highs.
China's Covid lockdowns
China continued its strict "zero-COVID" policy in 2022 resulting in lockdowns and mass testing in major cities including Shanghai, Shenzhen, Chengdu, Dongguan, and Guangzhou. The lockdowns halted operations at companies and factories resulting in reduced exports from China and commodity shortages. Carriers began committing port calls from ports like Shanghai resulting in increased vessel congestion in neighboring ports. Although most ports continued to operate during the lockdown, trucking services in and out of the ports were severely hampered.
Extreme Weather Events
During 2022, extreme weather caused considerable damage to global supply chains, as it does every year. In April of 2022, South Africa's largest port had to close down due to torrential rains and mudslides, factories in China had to close in August following a heat wave sweeping across the country, the ports of Ningbo and Shanghai had to close due to typhoon Hinannmor while hurricane Ian disrupted operations in the East Coast ports of the US.
Read about what happened in South Africa
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Our cargo insight, ship insight, and port insight platforms help our customers proactively manage and respond to unforeseen disruptions in their ocean transport, which in turn ensures a better quality of service for their end customers and financial gains.
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2022 was another tumultuous year for the ocean shipping industry. The combination of numerous disruptions ranging from geopolitical conflicts, Covid-19 lockdowns, industrial labor strikes, inflationary pressures, and extreme weather events gravely impacted ports worldwide and global supply chains.
The Ukraine crisis and the COVID-19 pandemic impacted global supply chains significantly in 2022, highlighting the importance of being prepared for unexpected disruptions and the need for agility and flexibility in managing these challenges. The Russia/Ukraine war disrupted trade and transportation routes, resulting in delays and increased costs for businesses that rely on imports and exports between the two countries. The ports of Mariupol and Odesa, key transit points for goods in Ukraine were disrupted and had to shut down by the conflict.
Despite the fact that almost everyone has a GPS tracking device in their pocket, tracking the location and status of vessels and containers continue to be one of the top challenges facing freight forwarders in the shipping industry.
