Analysts at risky modeling firm Russell Group have warned that just under $ 2 billion in UK trade imports could be affected heading into Christmas if current delays at Felixstowe ports continue into December.
But with supply chains under pressure globally, the losses are likely to be significant elsewhere as well, according to re / insurance brokerage specialist McGill and Partners.
Persistent container shortages, port delays, congestion, rising freight costs, logistics equipment in the wrong location, and lack of transportation options ultimately resulted in widely reported delays.
“The problem for freight owners is what the delays will mean for their business. As we have already seen following the grounding of the Ever Given in the Suez Canal, many of these ships contain perishable goods; delays ultimately mean that these goods are compromised or even worthless when they arrive at their destination, ”said Kevin Rimmer, chief freight officer at McGill.
“The bad news for many owners is that ‘delay’ is usually excluded from their marine insurance. This could mean that the industry could suffer significant financial losses due to delays in the supply chain. Unquantifiable and ultimately unsustainable losses.
Clothing is said to be the main commodity affected by the delays at Felixstowe and could put significant pressure on UK Main Street, with Asda and Tesco facing impacts of $ 63 million and $ 46 million, respectively.
Felixstowe is one of the UK’s largest ports with an annual trade flow of over $ 9.6 billion and handles 36% of the UK’s containerized freight as a shortage of truck drivers causes delays in moving containers.
“Delays at Felixstowe to deal with pent-up demand shouldn’t come as a surprise to seasoned observers of global trade events, as it is an issue affecting major ports from Long Beach to Yantian across the globe. “, Suki Basi, CEO of the Russell Group.
“As Russell has argued in the past, trade is becoming increasingly concentrated, as shown by a previous analysis of $ 7.5 trillion in global trade flows through 50 key ports. So when there is a blockage at a major port, there is a disruption throughout the value chain for consumers and businesses, ”explained Basi.
“Evaluating the impacts of disruptions or blocking events like Felixstowe on trade is absolutely essential. This can be done by analyzing trade flows at the country, route, operator, vessel, cargo and company level. This approach allows underwriters and businesses to assess their exposures in a timely and granular fashion, allowing business portfolios to remain viable in these tightly interconnected and rapidly changing times. “
But Rimmer warned that a solution to the broader problems facing global supply chains will be extremely difficult to tackle, due to the complex factors at play.
“The solution to this problem is not clear either. Encouraging more truck drivers has been a key focal point in recent times, but there are other challenges that need to be addressed as well, ”he noted.
“The first is the definitive shortage of container ships and bulk carriers. This problem will not be resolved overnight, with most shipping companies waiting up to 12 months to see new container ships in circulation. The shortage of these two types of vessels has skyrocketed freight rates to five times pre-pandemic levels. “