Shipping industry fiasco

How the current shipping industry fiasco is affecting the fibre recycling trade in the UK

The shipping industry is currently in the grip of mass disruption and delays with no short-term solution on the horizon. Global supply chains are unable to function as normal and this in turn has impacted almost every industry, both internationally and domestically, causing price inflation, product shortages, huge disorder and sizable headaches for all involved.

Unfortunately these shipping related problems are also affecting the recycling industry. The fibre recycling industry relies on an efficient shipping network to deliver processed paper and cardboard to accredited recycling mills around the world for recycling into new products.

However with a scarcity of containers, difficulty securing space on vessels and a demand by shipping companies that businesses load or unload in half the time usually allocated for the job- it is fair to say that ocean shipping has proved costly and problematic for the recycling industry in 2021 and it is unlikely to improve anytime soon.

Why is the shipping industry facing these problems?

Earlier this month it was reported that major shipping companies are diverting their vessels away from Felixstowe, the UK’s largest port, as it has run out of storage capacity. There are a few converging factors to blame for these port backlogs. The first reason is the well-known shortage in HGV drivers, which is having its own knock-on affect to the global supply chain. The lack of HGV drivers has resulted in containers sat waiting for weeks to be collected and taken to their final destination. These containers cannot be repurposed until the goods have been delivered and other ships are unable to offload their cargo until space at the port has become available.

The shortage of HGV drivers is particularly apparent in the UK due to an exodus of European drivers who returned home during the pandemic, Brexit, tax changes and a backlog of HGV driver tests; but it is not an issue confined to the UK with ports across the world unable to dock and unload container ships due to lack of storage, staff and available docking bays. Ports such as Los Angeles and Shenzhen have suffered significant delays with reports of dozens of container ships ready but unable to dock for weeks.

Storage at ports is not the only issue affecting the shipping industry today. Labour shortages at ports have been exacerbated by the COVID-19 pandemic with many staff furloughed, made redundant, off sick, isolating or shielding- heavily depleting the workforce at ports globally for the past 18+ months and profoundly impacting the shipping industry’s current problems.

With ports unable to function at full operational capacity due to staff shortages, loading and unloading of containers takes much longer and turn around times have increased. Subsequent COVID-19 outbreaks at ports and on shipping lines continue to cause further delays to the beleaguered industry resulting in higher freight costs as work stalls and backlogs continue to mount.

The COVID-19 pandemic has also brought another issue to the shipping industry- a surge in demand for consumer products; which shows no sign of slowing down.  A change in spending habits has seen more people using their disposable income to buy products rather than on holidays, events and eating out- previously what most disposable income was spent on. This surge in consumer buying has increased demand for products, consequently requiring more shipping containers and space on vessels which in turn increases the strain on a global supply chain that is struggling to keep up with the surge.

The complexity and fragility of the shipping network has also added to the industry’s woes with 90% of the worlds goods transported on the oceans.  Earlier this year we saw how one vessel stuck in the Suez Canal was able to have a colossal impact on the global supply chain causing delays, the rerouting of containers and ultimately sending the cost of shipping upwards.

The consequent lack of available shipping containers and difficulties securing space on cargo ships are a result of the aforementioned labour shortages, increased consumer demand and portside delays. The recycling industry (like almost all industries) has been hit hard. With prices continuously rising for shipping containers our prices have been affected significantly which has unfortunately had a knock on affect to customers.

Where do we go from here?

We find ourselves in a perfect storm of events and the subsequent fiasco plaguing the shipping industry and therefore global supply chains.

Whilst there is no simple solution to these challenges, there is hope. Felixstowe and other major ports have indicated that congestion is starting to ease portside and the shipping industry is working to alleviate the backlog and scarcity of containers by ordering many more containers and adjusting schedules to ensure each vessel is operating at maximum capacity.

But for now it looks like we have a few more months ahead of turbulent seas. And costs.

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