The Pandemic Disrupts Global Supply Chains Leaving Ports Worldwide Overstuffed
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The coronavirus has upended global supply chains. First, China shut down all of its manufacturing, then retail shops in the U.S., Europe and elsewhere closed. And that has left a lot of consumer goods out there with no place to go. NPR's Jackie Northam reports.
JACKIE NORTHAM, BYLINE: At least once a week, the Port of Los Angeles launches a drone over its expansive facility. The port's executive director, Gene Seroka, displayed photos from a recent flight which showed stacks of cargo containers on the docks. Many are heading to warehouses already filling up because of the coronavirus.
GENE SEROKA: We have approximately 1% vacancy in our more than 1.8 billion square feet of warehousing throughout the Southland.
NORTHAM: This is a scenario playing out at many ports in the U.S. and the rest of the world, says Lars Jensen, the founder of Copenhagen-based SeaIntelligence Consulting. Department stores and retail outlets that placed orders are now shut, but the cargo was already underway. Jensen says, quite often, it's left on the docks.
LARS JENSEN: If you look at India, for example, there was a period here where at least 60% of the truck drivers, they were not at work because they had been put in quarantine. So you might not actually have the trucking capacity to move it.
NORTHAM: Or there are serious cash flow problems.
JENSEN: The importer might, for example, have gone bankrupt. That is a very real risk in these days, which obviously means he's not going to come down to the port to pick it up.
NORTHAM: Jensen says others have simply run out of warehouse space. This is a complete reversal from late February, early March when Western importers were desperate to get goods again from China after the country had been closed down because of the coronavirus, says Shereen Zarkani, global head of sales for shipping giant Maersk.
SHEREEN ZARKANI: As soon as China started opening up, we had this rush of our customers asking to really find ways to speed up the supply chain.
NORTHAM: And then the coronavirus spread to Europe, the U.S. and elsewhere.
ZARKANI: All of a sudden, those same customers who were really rushing to get the cargo in, we started having completely different conversations on how do we store cargo.
NORTHAM: Maersk is one of a few shipping companies that have come up with ways to store cargo until the pandemic lifts. It is allowing large numbers of shipping containers to be stored at their hubs scattered around the world.
ZARKANI: We have around five big ones around the world, like in Malaysia or in Morocco.
NORTHAM: SeaIntelligence's Jensen says other shipping companies are changing routes in order to slow down the shipments and save money, for example, bypassing the Suez Canal, where Jensen says a single transit fee for a big container ship can cost half a million dollars.
JENSEN: Suddenly, it makes sense to take a long route all the way around Africa and not use the Suez Canal. And there's apparently a lot of the importers that don't really mind the cargo being a week delayed.
NORTHAM: The amount of shipped cargo is likely to slow down as fewer businesses place orders for goods until the coronavirus pandemic is over.
Jackie Northam, NPR News.
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