Bottlenecks and resulting supply shortages to persist for some time

It might be a long wait before prices stabilize for everyone

This whole year has been nothing less than apocalyptic for several economies. Port congestions brought forth series of business conundrums, aggravated by climate-related pressures. Soaring shipping rates also became the public enemy.

Obsession with inflation warranted
When port congestion dominated headlines, many businesses were either forced to live with heavy losses or folded to cut themselves loose. While desperate ones tried their best to survive by alternative means of shipping, the same set of problems followed suit. Today, even air and rail freight are getting flak from cargo owners for the same reasons.

The aviation sector might have spoken too soon when shipping suffered bottlenecks. Air freight is also suffering from business losses – suggesting their optimism for prolonged huge demand was either short-lived or a pipe dream. Michael Steen, Executive Vice President/Chief Commercial Officer of Atlas Air remarked in October 2021, “Shippers are turning to air freight because of the challenges at sea. The high demand was already there.” However, the current situation just undid Steen’s optimism for their sector.

This is not to say sea freight is on its way up. Tim Huxley, Chief Executive of Hong Kong-based Mandarin Shipping said, “Bottlenecks in global supply chains will take quite a long time to resolve and cause consumer prices to rise. The shipping industry is building more container fleets, but most of that new capacity would not be ready until 2023 at the earliest. More investments in infrastructure like ports, roads, and bridges are needed, but that too could take years to materialize.” It is clear that inflation will continue for some time from prolonged supply shortages. Much patience is needed for the chaos to stabilize.