It’s no secret that the global shipping situation has been “unstable” to say the least. Even with life in the west, in general, seemingly going back to normal, quite a few areas of it are still lagging behind. This primarily includes the economy, sales, and distribution of goods. Even here, at Verified Movers, within the moving industry, we’ve felt the current global situation’s hand of wrath. After all, our world was turned upside-down and it stayed that way for over two years. And as we all know, something as enormous as the global economy or something alike of similar magnitude is always going to be quite inert. Plus, no matter how much or how well we deal with global issues, new ones always seem to pop up unexpectedly, thus prolonging this period of uncertainty. So, it’s safe to say that we, as well as the shipping situation, are not going to go back to normal any time soon it seems. But to better cope with things, it’s important that we understand them and follow their growth and development. So why exactly has the global shipping crisis been the way it’s been? And what is the situation right now? Can we, as individuals, do something about it? Let’s discuss.
The primary driver of the crisis
It’s important to understand that a crisis like this doesn’t just happen. Quite a few things contributed to its development. But to put things simply, a rise in demand alongside lowered supply capacity and labor shortage created a huge problem for the industry. First of all, a lot of people lost their jobs. Even employees of strong companies like the top long distance moving companies California offers lost their jobs. And many, many more people all over the world. That means that there were fewer people working on producing goods and offering services. In 2020, the unemployment rate peaked at 13%! Afterwhich it slowly decreased to 7.6% in 2021.
Then, there was a serious shortage of raw materials and components necessary to produce goods. In 2020:
So, everything became more expensive. Due to all this, freight rates rose. Between March 2020 and March 2022, the cost of domestic shipping rose by roughly 21%. Plus, the way we lived for a while changed quite a bit from what it used to be. Pretty much the only option was to order things online. That paired with the goods and labor shortage created problems for the shipping industry. Later on, we’ll discuss why all this happened. But for now, it’s important that you understand what was the cause of the global shipping crisis.
The global shipping crisis: Why are things the way they are?
The biggest driver in the development of the current shipping crisis has clearly been the Covid-19 pandemic. The pandemic hit us all extremely hard. School children, fast-food restaurant employees, leading long distance movers Texas prides itself in, and shipping companies alike. But even though we’ve started the recovery process, we’re not out of the woods just yet. The war in Ukraine has also been contributing to the crisis. And not just the shipping crisis at that. All in all, the businesses and people are suffering, and we are noticing.
Understanding the influence of the Covid-19 pandemic
The Covid-19 pandemic was unlike anything we’ve ever faced in our lifetime. Most of us struggled. And so did businesses of all sorts. Including us at Verified Movers, many other amazing moving-related businesses all across the world, and even the top-of-the-line moving businesses, such as the long distance movers Washington residents love and recommend. However, the shipping industry felt it particularly hard. There was enormous pressure to deliver packages to people and businesses all over the world. But, there were also restrictions in place. That rendered shipping companies powerless. Running the business was particularly hard for them. Especially between March and June of 2020 when the restrictions were at their peak.
Maritime shipping changes due to the Covid-19 pandemic
There are two distinct periods marked by changes, in maritime shipping, that are important to note. The first half of 2020, saw a maritime container import decline of 7.0%, by volume. In the second half of the same year, however, there was a considerable increase in container imports. By both number and volume. Containerized imports rose by 9.5%t compared to 2019. And, even more so compared to the first half of 2020. It’s safe to assume that this is due to restrictions in the first half of the year, as well as the growing demand in the second half.
Clearly, things were getting better for the shipping industry, in a way. In 2021, the profit of the maritime container shipping industry was $150 billion. The previous year, it was a “measly” $25.4 billion. The 491% increase was showing promise. However, in 2022, things started shifting again. But, through no fault of the Pandemic that seemingly hit remission earlier this year.
Covid-19-induced aircraft shipping changes
There were two separate factors that contributed to air freight changes in 2020. The first, and perhaps the most notable, was a decrease in transport capacity. All this was due to the sheer number of flight cancellations. That meant fewer planes and, potentially, just as much cargo. However, that couldn’t be. So the amount of cargo had to be reduced. In 2020, air freight volumes, measured in air cargo tonne-kilometers, fell by 10.6%. The lowest point was in April of 2020, right after the start of the pandemic. This period was particularly hard for all industries. Not even the moving industry was immune to this. With short and long distance, as well as cross country moving companies California and other states have on offer, struggling to survive. However, the numbers started normalizing towards the latter half of the year. For freight businesses as well as moving businesses.
The other important factor was that there was a higher demand for a certain type of product. Protective gear to be precise. That means that available space, which wasn’t much to start with, had to be disproportionately divided between protective gear and other types of goods. All this led to a steep increase in air freight rates in comparison to 2019, with faires reaching their all-time high of 12.72 USD per kilogram of weight.
So, is the pandemic still a contributing factor to the current global shipping situation?
With the arrival of the Omicron variant, a lot has changed. Especially in Europe and USA. Most countries across Europe and states throughout the United States have abandoned pretty much all pandemic-related protocols and measures put in place by WHO. For a while, there was a widespread fear that doing so might spike the cases and make the situation far worse. However, most of the west, USA and Europe alike, went back to normal. People went back to work and companies started operating normally once more. That alone was enough to improve the global economic situation.
With that, even the shipping situation improved. However, the backlog of unfulfilled work due to all sorts of restrictions and shortages doesn’t just go away. That means that businesses all over the world have been relying on shipping companies, now more than ever, to deliver ridiculous amounts of goods to them. And that’s on top of regular people just ordering bits and bobs from Amazon. So there’s still an insane amount of pressure on freight companies and they are still struggling even with the objective improvements that have happened over the last several months.
The war in Ukraine is to extend the global shipping crisis
The newly-started war between Russia and Ukraine has also had a serious effect on the disruption of global shipping. Sadly, as it currently stands, the war is very likely to further worsen supply chain disruption, as well as the crew crises, and port congestion. The International Monetary Fund announced that the war will likely bring the shipping costs even higher than they previously were. And, that we will likely be able to feel the effects of it for a long time. But this was expected since everything else has also gotten significantly pricier over the last year or so. Even the most affordable long distance movers Iowa and other states offer have raised their prices. Trust us, we know.
But, back to the global shipping crisis. The Black Sea trade and trade with Russia definitely suffered the most. However, the consequences can be felt throughout the whole world. Most major Ukrainian ports have also been closed down. Thousands of vessels are currently trapped in the ports. Wood, coal, fuel, and grain, are all sitting in The Black Sea ports due to questionable shipping safety and people globally are starting to feel it.
All this is a huge problem for shipping companies. The war came back to back with the pandemic. And now, it has exacerbated these persistent supply and demand pressures for shipping. Which can only lead to further port congestion, prolonged transit times, and sadly, even higher freight fees.
Will things get better if we don’t stop the overconsumption?
Let’s be real, the above-mentioned reasons are likely not the only ones contributing to the current situation. Of course, if they were absent, things certainly wouldn’t be the way they are right now. There likely wouldn’t be a crisis of this magnitude and things would likely be pretty “normal”. However, there’s an upward trend in online shopping. People are opting to order things online rather than going to the shops and shopping in person. And here are some crazy statistics to back that claim up:
Obviously, shipping has never been in higher demand. And it seems like things are not likely to change any time soon. What’s more, it seems like this upward trend will continue. Will this crisis then continue indefinitely? Well, that’s not very likely. However, we as humanity will likely have to make some adjustments. Perhaps opening new ports, more aeroports, start more companies, and use more ships and airplanes for shipping. But will those adjustments then create new problems? Almost definitely. But doing something like that would certainly take the pressure off of existing freight companies.
So what can we do?
Businesses like us, and top movers in NYC and other states, have been trying to do what we can to make the situation better. However, throughout this whole situation, we’ve had our plates full helping people move and doing the best we can with what we had. But despite that, we and our colleagues gave it our all not to put even more pressure on the shipping companies and make the most out of what we already owned.
But, businesses are not the only ones that can do something about the current situation. Even though a single person can’t create much of a change on their own, simply taking a walk to a shop instead of going to Google for everything you need could actually make a difference. Especially if more people reverted back to the way things were before the online shopping mania. For now, that’s literally all we can do. Other than that, we just have to wait and see what freight companies do to make the situation better.
The global shipping crisis: It is what it is
For now, you, us, top movers in Chicago, and others simply have to wait and see what happens next. The current situation isn’t great. But luckily, things are looking up. Even with the things happening right now. We likely won’t go back to the way things were before the pandemic any time soon. But, we can also enjoy and celebrate the fact that the situation has improved and is continuing to improve despite some setbacks. However, we shouldn’t relax too much. The global shipping crisis is still going on and we have to be mindful of it if don’t want to make the situation worse than it has to be.