Shipping giant expects 2022 supply chain improvement, brands remain on edge

Shipping giant AP Moller-Maersk has told the Financial Times that it expects global supply chain struggles will slowly get back toward normal in the latter part of 2022.

“Normalisation (should) occur in the second half of the year,” the logistics giant told the paper as part of a broader story on the record-breaking financial results and growth through acquisitions that the business has achieved. Shareholders in the business are in line for a seven-fold increase in their dividend payments as a result of a 55% revenue spike to reach $62 billion last year. EBITDA tripled to hit $24 billion.

As reported previously, much of the hold up in global supply has been attributed to slow turnaround in US ports, though the UK’s are slower still. As of this month, in China, Container Exchange’s Availability Index values double up in January 2022 from 2019 and 2020-21, showing more containers repositioned to China and fewer outbounds (as compared to data from 2019-2021 for the month of January).

Maersk chief executive Soren Skou tempered his remarks on the supply chain by adding “We continue to have the combination of very high demand and less supply,” pointing to a current three to four week lead time to even enter a U.S. port on the West coast.

Owing to a rush that tends to be normal around Chinese New Year, average container prices remained volatile, rising again having cooled slightly later in 2021. Container xChange says that the lunar new year is expected to have a greater impact than the last few years because of extended factory closures in China owing to the zero-COVID policy.

A 40 feet high cube cargo worthy container that cost $5,374 in December 2021 at the Shanghai port, now costs $5,431 in January 2022. A similar trend is observed for Ningbo ($5,478 in December and $5,633 in January) and Qingdao ($5,255 in September and $5349 in January). In keeping with that trend, the leasing charges from China to North America have increased by 17% from December to January.

A full February report on supply chain movement and container metrics can be found here.

All of the above will be of little reassurance to some brands that remain at the mercy of changing forecasts. This week UK bike label Revel Bikes was just one to put out a candid customer message about delays beyond its control.

Adam Miller, owner and Founder of the label said: “Along with the rest of the world, we’ve been faced with incredible obstacles over the past two years. It has been difficult getting supplies, products, and materials in our doors and out to yours. The entire system is stressed and we’ve had a rough time getting you the Revel Bikes you want. It’s certainly not for lack of effort. We’ve spent countless of hours trying every possible (and NOT possible) way to get materials and parts delivered so we can get bikes made. We’ve pulled together an all-star team who works tirelessly to source parts from around the globe to get you on the trail as soon as possible. Despite having the most advanced software and people on the job, we can’t always find the right parts at the right time to get a complete bike delivered to you nearly as quickly as we’d like.

“We strive to provide the best possible customer service in the business. We have fielded hundreds of calls asking where your bike is and what our availability is like. We always try to give you the best answer. But I’m sorry to say that we have been wrong quite a few times. Recently, we’ve received a lot more bad news from our suppliers, and even more bad news from shipping companies. Lead times for the parts we need are getting longer, not shorter.”