Dubai- The global shipping industry is facing increasing pressures that may extend for several months due to the huge residue left by the health crisis on the movement of trade, in light of the high costs that led to the emergence of problems in the supply chains.
The disruptions, caused by the closures aimed at combating the Covid-19 pandemic and an unexpectedly rapid recovery in demand, have also caused a shortage of shipping containers and a record price hike.
DP World, one of the world’s largest port operators, expects supply chain bottlenecks that have disrupted global trade flows to continue for at least another two years.
“The global supply chain has been in crisis since the beginning of the pandemic,” said the company’s Chairman and CEO, Sultan Ahmed bin Sulayem, in a press statement on the sidelines of the opening of Expo 2020 in Dubai on Friday.
He said he could not predict when the unrest would end, but hoped for some kind of breakthrough next year. “Maybe in 2023 we will see easing,” he said.
Sultan Ahmed bin Sulayem: It is unpredictable when the unrest will end, maybe in 2023 we will see an easing
This concern stems from the assertion by some that there are several factors behind these expectations, including the severe fluctuations that the commodity market is currently witnessing, in addition to the effects of the pandemic, as well as supply and demand, change in currency rates, geopolitical positions, government policies, as well as the economic programs of countries.
Bin Sulayem noted that “until now, every time they see a Covid incident in China, they close a port. Many manufacturers around the world are delayed by up to three years because they cannot source components from China. They are taking a very risky approach.”
Global supply chains are struggling to keep up with demand and overcome labor disruptions caused by the coronavirus outbreak. Supply chain disruptions have worsened as ships wait days to enter ports such as southern California, where a record number of ships are waiting off the coast.
Denmark’s Maersk, owner of the world’s largest shipping lines, has warned that bottlenecks could last longer than expected, and some companies have vowed to cap spot prices.
Last month, Hsieh Hoi Chuan, CEO of Evergen, which specializes in shipping, told Bloomberg that “port congestion and a shortage of shipping container capacity, may continue into the last quarter of this year, and perhaps until the middle of 2022.” “If the epidemic cannot be effectively contained, port overcrowding may become the new normal,” he added.
Dubai Ports is one of the world’s largest operators of seaports and inland shipping terminals, with operations spanning from London and Antwerp to hubs in Africa, Russia, India and the Americas.
The company recently announced a series of deals as it tries to become a more diversified and integrated logistics company. Meanwhile, the company continues to look for ways to reduce debt, and is considering offering an opportunity for international investors to buy into the Jebel Ali Free Zone, a valuable asset that has helped transform Dubai into a global trade hub.
DP World is also reviewing costs related to office space after effectively weathering the disruptions caused by the pandemic.
Bin Sulayem said that “Dubai Ports has canceled plans to build a new headquarters and lease a larger office.” “We are re-engineering the way we operate,” he added. Do we need all these offices around the world?”
Port overcrowding and the lack of cargo container capacity, may continue into the last quarter of this year