Shipping containers are instrumental to global trade. Before the pandemic hit, a steady flow of steel boxes arrived and left ports across the globe. When it came to containers, there was a well-balanced global system of supply and demand. But the COVID-19 crisis disrupted it. The result: some products that were once manufactured in China are now sourced from production locations in the EU and the U.S. Why? Because it's faster and cheaper.
Let's dive into the topic and discuss a specific example: a card game that happens to be my side project.
In 2020, right after COVID-19 hit, container shipping lines canceled a large share of their routes in response to falling trade demand. But as consumers spent less on hospitality and recreation and more on products — many of which were made in China — demand for containers increased. Chinese companies started to ship products again, but COVID-19 and the associated restrictions still impacted port operations in the U.S. and Europe. An increasing number of containers piled up at ports and inland freight hubs, limiting the supply of available containers. The Suez Canal blockage and an outbreak-related shutdown of a Chinese port further disrupted the system.
At this point, the supply of available containers simply falls short in those places where demand is skyrocketing, like China. As a result, the cost of shipping a 40-foot container soared over 600% to almost €12,000. On top of that, practically all shipments are delayed by weeks.
For many businesses, a valid workaround does not exist. Either production agreements with manufacturers overseas are in place, or local production capacity simply isn't available. Local manufacturers struggle, too, as their supply chains are often disrupted as well.
But some companies do seem to have alternative sourcing options. For example, a U.S. furniture designer moved its entire wood furniture production stateside, and a U.S. home goods designer selected Mexico as a new source to avoid hefty shipping bills. Meanwhile, a Dutch wire mesh seller abandoned its Chinese supplier and opted for a European one instead after the cost for a container had begun to exceed the value of its content. We can't yet call it a trend in global trade, but the container shortage does make a move away from 'made in China' more attractive.
Here's a personal example. Over the past year, I've worked on a side project with three friends of mine. Together, we have created and self-published a card game: King Fridge: The Cool Card Game. As shipping from China came with higher costs and longer lead times, we decided to manufacture the card game in the EU instead. Usually, China is a good option in terms of cost and lead time — and, lately, quality. But horror stories from other tabletop game manufacturers convinced us to stay closer to home.
Yet, the trouble doesn't stop there. While we've tackled the container shortage problem and found a way to avoid high shipping costs caused by the pandemic, other global supply chain issues have emerged. Currently, we're dealing with a worldwide lack of paper.
Briefly put, COVID-19 has affected supply chains across the board, and we'll have to come up with (creative) solutions.