Global freight log jam deepened, pushing goods on their way to retailers and auto manufacturers

LOS ANGELES / LONDON (Reuters) – Amazon salesman Bernie Thompson relocated half of its production from China to mitigate his business risks and was still in the crosshairs of the logistical chaos that was controlling freight traffic around the world.

Strong demand for furniture, fitness equipment and other goods from home buyers sheltering from a worsening COVID-19 pandemic has turned normal trade flows upside down.

That left empty freight containers stranded in the wrong places, creating bottlenecks that now stretch from factories to seaports. Container ship operators carry most consumer goods, and transport and trade sources warn that long-term disruption to the industry could create shortages and hinder the global economic recovery. Thompson, founder of Plugable Technologies in Washington, sells home staples such as laptop docking stations. He diversified purchasing to be less dependent on one country for production and less exposed to US tariffs on Chinese goods.

Things didn’t go as planned and now, like many importers, he is concerned about keeping products in stock. “We took production out of China and put ourselves at a disadvantage,” said Thompson.

Its new factory in Thailand was the first to be delayed by about four weeks, in part because shipping companies were sending empty containers to the main trade route between the US and China. Those logistical issues ran up and now his remaining shipments from China – the world’s No. 1 manufacturer – are being delayed by as much as three weeks. And he’s not alone – US retailer Costco Wholesale Corp and Honda Motor Co Ltd in the UK have also been delayed. “Everyone is trying to squeeze through this narrow opening at once,” said Rick Woldenberg, CEO of Learning Resources in Illinois, which supplies educational toys to Amazon.com and other major retailers. It can “really ruin your plans,” he said. Container ships have been running at full speed since August – something that hasn’t happened in ten years, says Peter Sand, chief shipping analyst at industry association BIMCO.

Rolf Habben Jansen, CEO of Germany’s Hapag-Lloyd, told investors that the container line “uses every available ship”. MOUNTING FRUSTRATION Frustration is growing. Importers and exporters are “angry that they can’t move their produce or crop as much as they would like,” said Gene Seroka, executive director of Port of Los Angeles – America’s busiest seaport. “We need to make sure that the flow of trade lubricates the engine of the entire global economy,” said Christopher Tang, a business professor at the University of California-Los Angeles. The reduction of port personnel as a result of the COVID safety rules also plays a role.

“It’s a combination of strong volume and slower and less efficient operations,” said Lars Mikael Jensen, Head of Network at AP Moller Maersk in Denmark, the world’s largest container line. “This is the perfect storm for global container flows,” said Jensen.