Hello, everyone! Today, let’s delve into the fascinating world of global shipping. Imagine behemoth freighters carrying everything from shoes to smartphones across the inky, vast oceans. Now consider the impact if these vessels encountered obstructions on their routes. This precise scenario has recently been unfolding, resulting in considerable disruption.

Introducing Stephanie Loomis, the head of ocean freight for the Americas at Rhenus Logistics, a company headquartered in Germany. Stephanie’s role is to liaise with international shipping carriers, ensuring that goods and components are smoothly transported across the world. However, recent times have presented Stephanie with some significant challenges.

Just last year, rebels from Yemen started targeting ships en route to the Suez Canal, an essential pathway linking Asia, Europe, and the U.S. East Coast. This situation necessitated a lengthy detour around Africa, adding a fortnight to these vessels’ voyages.

Furthermore, a severe drought in Central America affected the water levels in the Panama Canal, another vital conduit for global trade. This situation forced authorities to restrict the number of ships that could traverse this passage.

Adding to these problems, dockworkers in the U.S. and Germany have been threatening to strike, and rail workers in Canada are preparing to walk out. These actions could lead to significant backlogs at major ports, disrupting the steady flow of goods across North America.

The ripple effects caused by these disruptions are substantial. Consider the impact when a container filled with crucial chemicals arrives late at a factory. The delay in production is inevitable. And when ships are held up at ports? Warehouses become congested, pressurizing the trucking and rail industries.

Stephanie refers to this predicament as “Covid junior.” The reason? It echoes the chaos inflicted on the global supply chain during the pandemic. Shipping costs have soared, and retailers are at risk of product shortages during the critical holiday shopping season. On top of this, the whole situation could trigger inflation, exacerbating economic concerns.

To provide some context, the expense of transporting a 40-foot shipping container from China to Europe has surged from an average of $1,200 to approximately $7,000. Want to ship a container from Shanghai to New York? You’re looking at a cost of nearly $8,000!

The problem isn’t solely about escalating costs. Importers are also contending with carriers rescinding confirmed bookings and imposing extra charges to secure containers on vessels. As David Reich, who manages a gift basket assembly company for Walmart, says, “Everything is a fight to get containers.”

Interestingly, experts suggest that the lack of competition in container shipping allows carriers to hike up prices when the system is under strain. The industry accumulated record profits during the height of the pandemic disruptions when retailers were shelling out as much as $28,000 to transport single containers across the Pacific.

So, what’s causing these shipping price inflations? The culprits are a combination of geopolitical tensions, increased fuel consumption, and overrun transshipment ports. Even the potential of a rail strike in Canada is causing cargo to be redirected to Southern California, the epicenter of the worst traffic jams during the pandemic.

Most concerning, we cannot predict how long this will continue or what will happen next. Climate change threatens future droughts that could impact the Panama Canal. Similarly, political tensions such as the Houthi attacks add vast unpredictability.

For now, individuals like Stephanie Loomis are steering through an exceptionally intricate situation with no evident solution. As she puts it, “They will manipulate capacity, and they will jack up freight rates.”