Four elements that explain the storm of global logistics

We are living the perfect storm. Delays in deliveries, exorbitant increases in freight, shortages… There is maximum uncertainty, and, at KENSA, we are working tirelessly in order to offer our clients alternatives. We are also investing time in explaining to those working with us what is going on with international freight traffic and how we have come to this situation where volatility is the norm. 

I shall attempt to sum up all the interlinking elements which have managed to multiply the difficulties currently facing the logistics sector:

1. Ports, closed intermittently

The closure of Asian ports at the start of the pandemic was unexpected. Then came closures all over the planet. There was a period of time when it was thought that traffic would return to normal after a few weeks, but this has proved impossible because, for several months now, many ports, particularly Asian ports, are closed again whenever a new outbreak is detected. All this implies congestion at ports and, as a result, delays in the delivery of goods. This in itself would be problematic in a normal context, but, at this point in time, demand has increased significantly. Let us continue.

2. Soaring demand

The global economic slowdown has, in many cases, giving rise to economic problems, but it has also resulted in major savings by families in other urban centres. These circumstantial savings, combined in many countries (especially the EU) with the financial aid provided by the government to help reactivate the local economy has generated an unprecedented demand for consumer goods. Purchases of all kinds of items, from mattresses to cars, including computers, have grown to an extraordinary extent; and a large part of the products purchased are manufactured in their entirety in, or require parts that come from, the planet’s great factory: Asia. These purchases inevitably raise the pressure on the already stressed maritime traffic.

3. Missing containers

In the midst of this madness, the bottlenecks caused in some of the major ports in the world have led to a scarcity of containers. Some are at sea; others are even traveling empty so that the vessel does not need to stop and wait for it to be filled. Furthermore, in view of this, some companies double book containers, which only makes the situation more complicated within a vicious cycle.

4. And the price of freight, is unstoppable

This situation of exorbitant growth in demand, particularly in the United States, has pushed up freight prices. These prices rise endlessly week after week and those of us who have been in the business for years find them hard to understand. However, this is the reality. Worst of all, this rise is apparent in all routes. After all, why would a shipping line run the Brazil-Mexico route at the old price if it can send a vessel to link North America or Europe with China at current astronomical prices? 



As mentioned above, it is the perfect storm. Each one of these elements exacerbates the following and, between them, they create disturbances that are not only fracturing the logistics chain but also the economy of the entire planet. When the storm is over, and let’s hope it will be soon, a lot of things will need to be reconsidered and rebuilt.