The price increases and container shortages suffered last year<\/a> by the companies most dependent on importing goods from China threaten to repeat themselves, although this time the origin is quite different. If in 2021 the main cause was China’s stockpiling effect<\/strong>, aimed at guaranteeing the consumption needs of 1.2 billion inhabitants, almost four times the population of the entire European Union, this year the trigger is the Russian invasion of Ukraine<\/a>. The deployment of Russian armed forces on Ukrainian territory has brought the rail lines crossing Ukraine to a standstill, while international economic sanctions on Russia have led the Russian government to also close part of those routes.<\/p>\n\n\n\n The consequence is that the rail route linking Asia with Europe, known as the Silk Road<\/a>, which China promoted at the beginning of the previous decade as an alternative to sea routes, has been interrupted sine die<\/em>, and that has forced the major logistics operators working in the area to turn unanimously to sea routes, which could well unleash another spike in ocean freight rates (the price paid to transport goods by sea) and a shortage of containers to move goods to Europe.<\/p>\n\n\n\n Initial estimates suggest that up to one million containers have had to change their routes and opt for sea shipments from Chin<\/strong>a, which adds a further point of pressure given the difficulties of guaranteeing the supply chain of a global company in a shifting context of prices and capacity availability. Kuehne+Nagel International AG<\/a>, one of the largest logistics companies in the world, has stopped serving the rail line between China and Europe, as acknowledged to Bloomberg by Marcus Balzereit, the company’s vice president for Southeast Asia.<\/strong><\/p>\n\n\n\n In the previous crisis, which occurred in the last quarter of 2021, one of the hardest-hit sectors was consumer goods, heavily conditioned by the Christmas season. In those months, Oliver Giner, head of the Foreign Promotion department of the Spanish Association of Toy Manufacturers<\/strong>, denounced that the cost of a container transported by ship had multiplied fivefold, going from 3,000 to 15,000 dollars. \u201cIf orders used to take four to five weeks to arrive from Asia, they now take a minimum of ten weeks,\u201d Giner stressed. That delay forced toy manufacturers to bring purchases forward massively, albeit at higher prices, so margins at the close of the Christmas season were lower. Francisco Aranda, president of the logistics employers’ association UNO<\/strong>, notes that in the final months of last year, traffic on the rail route doubled and even nearly tripled toward the end of 2021. \u201cIt was a very attractive alternative to the congestion detected in Chinese ports,\u201d he stresses.<\/a><\/p>\n\n\n\n Although none of its members has reported problems in the current supply chain for buying and selling goods in China, Aranda acknowledges that something must be going on. \u201cBetween mid-January and the end of February, which coincides with the Chinese New Year, port traffic in the Asian giant hits annual highs on strong domestic demand, and from the first week of March it falls sharply<\/strong>. However, ocean freight rates rose steadily in March. In the last week alone they increased 3.3% over the previous one. That means there are renewed supply tensions and that port congestion is increasing,\u201d he remarks.<\/p>\n\n\n\n Although none of its members has reported problems in the current supply chain for buying and selling goods in China, Aranda acknowledges that something must be going on. \u201cBetween mid-January and the end of February, which coincides with the Chinese New Year, port traffic in the Asian giant hits annual highs on strong domestic demand, and from the first week of March it falls sharply<\/strong>. However, ocean freight rates rose steadily in March. In the last week alone they increased 3.3% over the previous one. That means there are renewed supply tensions and that port congestion is increasing,\u201d he remarks.<\/p>\n\n\n\n Aranda adds that the current situation is compounded by two other problems that could create bottlenecks in moving goods by sea from China to Europe. \u201cOf all the crew members engaged in the seaborne transport of goods, 11% are Russian and 4% are Ukrainian, so the invasion is causing an additional problem of staff shortages.\u201d The president of UNO also highlights the fact that the US dockworkers’ labor agreement expires on July 1 and will have to be renewed<\/strong>. \u201cThe last time the agreement lapsed there were four months of conflict that led to strikes, supply disruptions and bottlenecks. That would be disastrous for US ports, which are currently at full capacity. If the recent conflicts are repeated and there is no agreement, it is possible that not a single ship will enter or leave a US port.\u201d<\/p>\n\n\n\nSupply chain<\/strong><\/h4>\n\n\n\n
Ocean freight rates rose in March, a month in which they usually fall<\/h3>\n\n\n\n
Rail as an alternative<\/strong><\/h3>\n\n\n\n
15% of the crews on cargo ships are Russian and Ukrainian<\/h3>\n\n\n\n
Staff shortages<\/strong><\/h4>\n\n\n\n
DEPENDENCE ON GOODS FROM THE ASIAN GIANT<\/h4>\n\n\n\n