The coronavirus has kept everybody guessing on what’s going to
happen with China, the Supply Chains and the movement of cargo to and
from Chinese ports
I call it the BAC or the Ball and Chain effect. If the
ball slows down and the chain is connected to your leg then you will slow
down. It’s the back and forth situation
that no one seems to have a grip on the proverbial Ball and Chain.
This is what has happened with the movement of cargo recently. Companies got caught. The ball dropped AND it was tied to the chain. Funny, it isn’t Time Square in NYC on 12/31…
About mid February it looks like the data is showing that both
import and export cargo flows had reverted back to historical norms. Good news
or good noose? This was to be expected
as the Chinese port workers and truckers returned after the extended Chinese
new year holiday. However, business felt
the noose tighten, as the availability was uncertain for a while.
The big question that is very important to US transportation
companies is whether the volumes will sink BAC if there are disruptions,
reduced demand and if China tries to jumpstart the situation again. It’s
the back and forth swing that affects the confidence of businesses.
Most of the exports from China declined through the mid February
mostly because of the container sector. Statistically
the volume loss has now increased to 1.9 million TEU (20 foot equivalent
units). If you average $1,000 per TEU, this is a loss of $1.9 billion for
the carriers. So, it is significant –
this moves profits BAC.
So don’t let the ball and chain affect your supply chain !
The years of China as the “only” supply chain are coming to a close. Companies were too heavily entrenched in
China and got caught by “supplies” and the inability to move or supply cargo.
Even though things look like they’re getting back to normal it doesn’t mean the consequences of the domino effect are over. For some customers the real question is whether or not they can actually get their cargo moved and let’s see how much they’re willing to pay to cut loose from the ball and chain. Contact us so you won’t get your Supply Chained to the Ball !