Cargo Ship Dilemma: How This Will Impact You in Significant Ways

[Music] there are a record number of container ships laden with cargo backed up off the california coast the reasons for the log jam they're mini but the root cause harkens back to the fact that the supply chain is still in shambles and it doesn't look to be getting any better any time soon it will likely even get worse before the ship writes itself in a previous video we thoroughly examined one piece of the supply chain that's currently experiencing problems and that's trucking i'll post a link in the cards above if you want to check out that video this video will look at another equally critical part of the overall global supply chain and that's trans oceanic shipping i'll explain what's going on right now what you should brace for what other systems may fail as a result of this disaster and what you can do now to prepare yourself for what at worst could equate to a shortage of everything as yet another domino falls this video is a bit longer than normal because the more we researched this issue the more problems started appearing it's a convoluted mess that we try to break down without oversimplifying the problems so let's jump in please consider subscribing to our newsletter by clicking on the link in the description and comment section below if you enjoy this video please subscribe and click the like button to help the channel grow the complicated fillings of the shipping industry that have brought us to this point are many still it is vital to highlight the major problems of the present and recent paths to understand how complex a problem is once you understand all these reasons you will see that these problems may persist into the distant future and precipitate a more significant supply chain collapse covid many of the problems related to the global supply chain stem from kovit factory closures and lockdowns through the first part of 2020 ground to a halt the finely tuned supply and demand network the pacific journey of goods before covid looked something like this an order was placed a container was filled a third-party shipping company found the appropriate space on a massive container ship it was shipped received at one of california's 11 ports but probably either the ports of los angeles or long beach it was loaded on the truck chassis or a rail car transported to a warehouse in your region and then the product was eventually delivered to your doorstep or store that was a finely tuned system that could bring products to your door from china in about two weeks or less kovit it threw a wrench in that system and the supply chain wasn't prepared for it manufacturers in china halted production and raw material producers were forced to shut down new intake protocols had to be established at the exporting and importing ports ports rely on labor procedures for testing even tests needed to be developed with no goods flowing in anymore labor cuts were made everything everywhere slowed down or stopped flowing all and the world waited for a cure or at least a glimmer of light on the horizon from the long night of covet uncertainty while supply had ceased to flow demand started to skyrocket although there was a significant uptick in ships awaiting entry into the port at the start of the pandemic around march of 2020 the backup accelerates significantly by the fall when demand for goods exploded filling up all available births at ports and forcing ships to anchor offshore and await their turn more people confined to their homes started ordering online with wallets full of their individual share of trillions of dollars of stimulus money people placed orders for essential prepping items to provide themselves with some insurance against a more significant decline with money and time on their hands they started long dreamed about remodeling projects bored at home consumers ordered everything from washing machines or refrigerators to treadmills fueling a global trade in goods and boosting demand for ships to deliver them needing to pivot to work from home they snapped up large chunks of available inventories of computers even office furniture all the while there was a significant shortage of microchips and other essential parts and complete products so demand was accelerating upward the inventory on hand was depleted and the replenishing manufactured supply was reduced to a crawl imagine simultaneously slamming your feet down hard on the gas pedal and the brake the engine redlines but the car doesn't budge you don't have to be a mechanic to know how this can negatively affect the whole system the car's engine add to this the uncertainty and necessity of new policies to protect countries from the spread of the virus unions seeking to protect their dock workers governments seeking to vaccinate dock workers and truck drivers and it's easy to see how complex it gets even now so laid into the virus china has a policy of testing the entire crew of any container ship trying to dock if the crew was picked up in singapore or the philippines travel to china to pick up cargo bound for the us or euro and one crew member test positive it is sent away from china and it has to either return to the country it came from or get a new crew or to wait out at sea until all crew members test negative for the virus to say that covetous cause a massive earthquake in the shipping industry that would be an understatement it has been a tectonic plate shift suez and other disasters right when demands shifted to accommodate a lockdown populace and factories worldwide begin to reopen from being forced to close due to sick workers the evergreen a 20 000 teu or 20-foot equivalent unit cargo ship got stuck in the suez canal though it backed up traffic from both ways through the canal some 369 cargo ships it sounds like a mere stutter step or hiccup in the system at the average of 15 000 teus per vessel that may have represented over 5 million containers that compounded shortages on everything from shoes to coffee beans from semiconductor chips to garden gnomes yes there was a garden gnome shortage in the uk sheep bound for romania died in transit fresh food spoiled viral raw materials and apis or advanced pharmaceutical ingredients forced manufacturers in europe to halt production more telling of how tightly wound and overly fine-tuned the supply and demand chain had become though was the fact that many manufacturers needed to shut down their factories because they lacked both containers to fill and vessels that carry them away the incident exposed a deep need to investigate supply chain resilience and disruptions to just-in-time manufacturing already facing shortages from covet pandemic impacts if the world ever catches its collective breath from being kicked while it is down it might just explore these deeper issues for years lopsided trade has resulted in containers on a one-way journey and there's very little profit in shipping empty containers back the blockage and containers sitting idle at their final destinations resulted in a lopsided supply of empty containers on the receiving end and a deep need for them on the sending end while several countries of origin have begun to manufacture their own containers to ship and more container ships will be brought online by late 2020 or 2023 that's a long way off still in this immediate crisis an industry without accountability the shipping industry lacks any central control mechanism one decision maker or even a small group of decision makers can't just look at the industry and say here's a problem so let's flip the switch to correct it the only driving mechanism is profit which can leave people stranded adrift or without the products they need in some cases corporations go bust leaving ships stranded in foreign ports their crew unable to disembark and unpaid for a year or more skeleton crews sleeping on the decks and slowly starving to death this is the ugly side of the decentralized supply chain that prioritizes profits there's often no singular entity to blame when cargo is lost a ship sinks or even gets stuck in a canal delaying the transit voyage of a thousand other vessels a conglomerate in norway may own the cargo ship and it may then be registered in an entirely different country for instance liberia ranks 141 out of 167 on the prosperity index yet it is a safe place to register a cargo ship and thousands are registered there the ship may never actually go to the freeport of monrovia capable of birthing three to four ships at a time but it doesn't matter registering it there and flying the liberian flag on the vessel will cost the owners very little and result in very little accountability should anything ever go wrong though the captain and officers of the vessel maybe from europe or some other first world country the crew is typically from a third world country or the most impoverished parts of the world seeking a better life and often in their first pair of real shoes and clothes they are often the victims of failed decisions razor thin margins it is a cutthroat industry where profit margins are very thin the manufacturer needs containers to fill in their goods shipped a third-party shipper will be employed to smooth the transit of goods and secure space on cargo carrying ships when systems are strained as they are right now the limited space often goes to the highest bidder and this competition drives up everyone's prices and costs a lack of fuel and oil drives up the petroleum prices a shortage of trucking parts and truckers which i outlined in another video i'll link to in the cards above means that many trucks are sitting idle and the chassis needed to transport those 20-foot equivalent unit containers teus are sitting idly at their endpoint destination windows chassis are at their endpoint warehouses none are to be loaded with containers at ports so ports are at the maximum storage capacity even overloaded demerge refers to a container that has been offloaded and is awaiting being loaded onto the next leg of its journey a terminal operator charges a small fee for essentially running the space in a perfect scenario this fee is nominal because a container gets rapidly loaded onto a trained car or truck chassis in his whisked way as if the trucking shortage wasn't enough of a problem there's a rail car shortage as well the rail car shortage which began last month due to severe weather that disrupted role operations in the country's midsection is having a more significant impact on cargo flow at north america's largest import gateway than both shortages of labor and chassis all along the supply chain from containers defining labor to fuel costs to demerge costs have gone up the average detention and demerged charged more than doubled from 2020 increasing 104 percent fuel costs represent as much as 50 to 60 of total ship operating costs and that's the only bright spot for shippers cheaper bunker fuel prices have kept the cargo ships operational many are foregoing the larger cargo ships because they have difficulty finding space on them or they don't want to risk products languishing in the waters off ports for weeks or months waiting to be offloaded favoring smaller ships that carry less cargo may put less product at risk but ports spend the same amount of time getting the ships in offloading them and guiding them back out but these are minor problems compared to the overwhelming problem of the congestion of containers using up all the available storage space if there's nowhere to put the container once it's offloaded no more ships can be unloaded that is why hundreds of ships are off the coast in a line awaiting their turn off the coast of southern california alone tens of thousands of shipping containers are stuck as the ports operate below capacity short of workers equipment and the means of pushing containers further down the road or railway oversimplified supply and demand system so that covers some of the unique problems facing the supply chain but let's really look at the system accepting that i will oversimplify it here the system really starts with raw material creators mining logging refiners and others involved with generating or processing raw materials suffered disruptions from labor shortages to work stoppages next is a manufacturer who takes those raw materials and processes them further silica sand gets converted to silicon wafers and printed with microchips crude oil gets converted to a multitude of petroleum products palm oil gets converted to a multitude of food products and so on and so on as i said earlier these manufacturers were forced to slow or altogether hot production because they lack the materials the containers or the shippers the cargo ships aren't turning a profit when sitting idle off coastlines either full or empty when they get into ports they are slowed because of the number of containers waiting to merge they're merely stuck awaiting their chance to get offloaded then lacking railway cars and truck chassis ports are backed up and refused new container ships into their port truckers are in short supply and you can reference my other video on that even railway cars are in short supply some retailers have taken extraordinary measures in the decentralized shipping industry to lease out whole vessels and guarantee the smooth flow of their products regardless of third party shippers costco for example is running three container ships and several thousand containers to shield itself from supply chain delays and rising costs that trend may continue cost of everything will increase as demand continues and hurdles are faced at every step of a product's journey once prices go up they rarely go down shippers charge more to manufacturers manufacturers charge more to retailers retailers have to charge more to customers the supply chain may be high or low it doesn't matter if it doesn't get to your neck of the woods or you can't afford it when it does get there if that's not a whole product but rather a part you need to maintain your tractor car or business you may not be able to meet your personal supply and demand equation enough to stay in the black will it get better the thinking is that if things ever correct their course it will be around february of 2022 at our current moment summertime to early fall all the christmas goods generally come into the country the shipping industry usually runs about six months ahead of schedule it is already being forecasted to be a lean holiday year products are stuck on ships or in the harbors or on the loading docks of manufacturers worldwide typically there's a lull in purchasing and shipping after the holidays people take a slight buying pause and demand drops it a little this is followed by the chinese new year a 15 day celebration beginning february 1st that closes most factories if consumers accept their backwards delays out of stocks and embrace a leaner gift-giving season panic buying and hoarding activities may not become a thing now if these panic activities are restrained further pressure on the demand side of the equation may not grow the easing demand along with the natural slowing season could result in chassis and railway cars returning to ports empty containers and ships returning to exporting countries and restoring the flow of raw materials so barring new covet variants natural disasters striking major ports or fuel supplies and panic buying during inventories and spiking demands things could begin to return to a sort of normal around the second quarter of 2022 world leaders they're praying that this is true consumers are cautiously optimistic about it the only people uncertain about that outcome are terminal operators who have realized a new and highly profitable revenue stream and charging demerged fees to shippers unable to move their products out of ports they are also currently reaping the most profit from the supply chain failure as de facto landlords of pack shipping containers will it get better things go right into next year yes if anything goes wrong though and really i mean anything a further unraveling of the system could occur panic buying hoarding unmet consumer demand a restoration of on hand inventory levels any of these could result in in repairable harm to the system if none of these wrenches enter the systems there's a good chance things will return to a sort of normal albeit that major retailers and manufacturers will continue to examine ways to keep their products flowing to consumers we could very well see an expansion of the amazon logistics fleet costco or walmart cargo ships maybe even an amazon port what it means to you for every consumer this will mean that they will have to dampen their consumptive desires lower their expectations and become a little more self-sufficient people will have to look to fulfill their needs more locally and turn away from extremely costly imports that's the formula of a prepper's dreams as many have been seeking self-reliance for years the problem is that the flow of essential equipment of goods will continue to be strained for those new to prepping this means the cost of preps will continue to go up the inflationary effects compounded by reduced inventory will result in rising costs and pressures on other markets and governments this can lead to civil unrest labor strikes or runs on various products at stores what it means to you should be that you need to focus on the essentials as you would prepare for another extended lockdown due to covet natural disaster or civil unrest make sure that you have the basics of a three-week supply of food and water secure now your energy needs to sustain your basic needs for an extended outage make sure that you have the means to collect filter and purify water ensure that you have the skills to preserve food live within your environment and survive a long drought of what is currently perceived as normal it may take months for things to return to a new normal in the supply chain i think we will get there eventually but i don't know what that will look like and even my vision of that is troubled by any number of problems that could still arise from panic buying to inflation to natural disasters and so forth we have so much ground to make up in what is a too finely tuned machine still i'm hopeful that we will see these disruptions as an opportunity to reassess our systems sure but also as an opportunity to evaluate our wants versus our needs what do you think do you see this ship riding itself or do you think it will just get worse from here what are you finding is out of stock on backorder or in short supply and what are you doing about it always enjoy getting your feedback and thoughts so please post those in the comment section below as always stay safe out there [Music]

Channel: City Prepping

Views: 2,475,722

Keywords: container ships, long beach, supply chain, just in time, supply chain disruptions, shortages, prepper, preppers, doomsday preppers, emergency preparedness, shtf

Id: cEdKaEVNg3M

Length: 19min 19sec (1159 seconds)

Published: Sat Oct 02 2021