The containerized logistics chain cannot get out of one disruption and enters another. Currently, the conflict between Russia and Ukraine adds to a global scenario of high freight rates, which have shippers paying small – and not so small – fortunes to transport their goods around the globe. These historically high values, between 4 and 5 times the pre-pandemic averages, cannot be combated in any way, so other actions must be taken in a global context where the demand for products does not stop and port congestion in the shores of the planet can confirm it. To this situation are added –or subtracted– the empty containers that are 'stranded' in ports from where the demand for imports is greater than that for exports, which is where the root of the shortage of containers in the world lies.

The future may be uncertain, but the ability of shippers to react and navigate these difficulties is controllable and known: it is time to take action.

Contextualizing projections

According to analysis of McKinsey, To which Maritime World exclusively agreed, it remains virtually impossible to determine when the supply chain will 'normalize'. Rather than return to the pre-pandemic status quo, it would be about finding a new operational balance that has the flexibility to adapt to disruptive events, allowing operations to continue without major consequences such as port congestion, container shortages, lack of available spaces or incredible rate hikes.

The consultant proposes four possible 'normalization' scenarios, based on current disruptive conditions. But, first, it is essential to understand the current context, driven by the continuity of consumer demand due to the economic recovery and greater purchasing power. To this is added the logistics capacity, hand in hand with a higher volume of ocean capacity combined with greater availability of land equipment, that is, more effective capacity: drivers, loading/unloading equipment, trucks, stevedores, warehouses, etc.

four scenarios

The trends in the demand for containerized cargo logistics can lead to four possible outcomes, as proposed McKinsey. The first of these is a quick recovery to pre-pandemic levels of 2019. This would be achieved thanks to successful government interventions, better working conditions and greater coordination between the stakeholders of the value chain. To achieve this there should also be a drop in demand to 2019 levels.

The second possible outcome indicates that the current market conditions continue their course, achieving a normalization of capacity by Q3 2023, where rates remain at levels 25% higher than the averages of 2019. In this scenario, the interventions of Regulators, ports, and rail lines create relief conditions and more ocean capacity becomes available. Demand continues to grow modestly and port congestion is beginning to ease.

The third scenario proposes a slower recovery towards Q1 2024, and where the rates remain 50% above the 2019 averages. The market relief conditions are marginal and no substantive improvements are achieved in the increase in system capacity. Demand remains more or less the same and port congestion begins to ease, only manifesting a crisis in the face of specific disruptive events.

The fourth proposal is the least optimistic of all. Current capacity shortage conditions extend into 2024 and efforts to improve port fluidity fail, where logistics teams face a series of hurdles and where onboard capacity remains compromised. Import demand continues to grow modestly and transport delays remain. At this point, port congestion is chronic and shipowners adopt strategies to optimize long waits in ports.

building resilience 

Much has been said about the importance of developing resilience, and given the scenarios described, even worse in the most optimistic, it is important to define what constitutes resilience. There is no exact recipe for success, since that will depend on the needs of each shipper, but the truth is that part of this resilience is built with the incorporation of alternatives: suppliers, ports, routes and even the design of their products and their packaging, to optimize cargo volume. Whatever the solution, it's up to each of us to find that perfect balance.