London Daily

Focus on the big picture.
Monday, Sep 15, 2025

Global shipping was in chaos even before the Suez blockage. Shortages and higher prices loom

Global shipping was in chaos even before the Suez blockage. Shortages and higher prices loom

One of the world's most vital trade arteries has been blocked by a quarter-mile-long container ship, creating a traffic jam that has ensnared over 200 vessels and could take weeks to clear.

But even before the Ever Given ran aground in the Suez Canal earlier this week, global supply chains were being stretched to the limits, making it much more expensive to move goods around the world and causing shortages of everything from exercise bikes to cheese at a time of unprecedented demand.

A prolonged closure of the key route between West and East could make matters much worse. Costly delays or diversions to longer routes will heap pressure on businesses that are already facing container shortages, port congestion and capacity constraints.

The grounding of the Ever Given is delaying shipments of consumer goods from Asia to Europe and North America, and agricultural products moving in the opposite direction. As of Friday, some 237 vessels, including oil tankers and dozens of container ships, were waiting to transit the canal, which handles about 12% of global trade.

"There's been a great convergence of constraints in supply chains like I've never seen before," said Bob Biesterfeld, the CEO of C.H. Robinson, one of the world's largest logistics firms. The bottlenecks are widespread, affecting transport by air, ocean and road, Biesterfeld told CNN Business in an interview. "It really has been unprecedented."

The Ever Given turned sideaways in Egypt's Suez Canal on Tuesday, blocking traffic in a crucial East-West waterway for global shipping.


Freight costs soaring


More than 80% of global trade by volume is moved by sea, and the disruptions are adding billions of dollars to supply chain costs. Globally, the average cost to ship a 40-foot container shot up from $1,040 last June to $4,570 on March 1, according to S&P Global Platts.

Those costs add up. In February, container shipping costs for seaborne US goods imports totaled $5.2 billion, compared to $2 billion during the same month in 2020, according to S&P Global Panjiva.

These expenses could soon mean higher prices for consumers, adding upward pressure to rising inflation — a nightmare scenario for Wall Street, which is already fearful that a spike in prices could force the Federal Reserve to hike interest rates sooner than expected.

"At the moment a lot of these costs are within the supply chains," said Chris Rogers, a research analyst at S&P Global Panjiva. "I think it's inevitable that it will be passed on to consumers — it's just going to take time," he added.

An aerial view on February 22 of Yangshan Port south of Shanghai, one of the world's busiest container shipping ports.


The coronavirus wreaked havoc on global supply chains last year, as lockdowns temporarily closed factories and disrupted the normal flow of trade.

Economic activity slowed dramatically at the start of the pandemic, and the rapid rebound in trade volumes that followed caught companies off guard.

A pickup in manufacturing and seemingly insatiable demand from housebound consumers for goods such as televisions, furniture and exercise bikes has stretched suppliers and made it difficult for consumers to find the products they'd like to buy.

Manufacturers have also struggled to secure crucial components. Major carmakers, including Ford (F) and Volkswagen (VLKAF), have been forced to idle factories because of a shortage of computer chips caused by high demand for smartphones, gaming systems and other tech gadgets.

"One year ago, global trade slowed to a crawl as the Covid-19 pandemic first hit China and then spread worldwide," Gene Seroka, executive director at the Port of Los Angeles, said in a presentation this month. "Today, we are in the seventh month of a historic import surge, driven by unprecedented demand by American consumers," he added.

US seaborne imports were nearly 30% higher in February than the same month last year and 20% up on February 2019, according to S&P Global Panjiva.

The import surge in the United States and elsewhere has led to a worldwide container shortage. Everything from cars and machinery to apparel and other consumer staples are shipped in these metal boxes. The factories that make them are mostly in China and many of them closed early in the pandemic, slowing down the rate at which new capacity was coming on stream, according to Rogers.

Containers are in all the wrong places


China's exports recovered fairly quickly compared to the rest of the world. At the same time, major shipping lines had canceled dozens of sailings to respond to the earlier lull in trade. The result was that empty containers piled up in all the wrong places and couldn't meet the sudden demand in Europe and North America for Asia-made goods.

Hapag-Lloyd (HPGLY), one of the world's largest container shipping lines, has deployed about 52 additional vessels just to move hundreds of thousands of empty containers to where they're needed most. In more normal times, there would be fewer than 10.

"That's in reality about a ship a week that's doing nothing more than moving empty containers," CEO Rolf Habben Jansen told investors on a call last week.

Ships sit off the coast of Seal Beach, California on January 26, 2021.


The influx of imports has compounded problems at choked up ports, which are contending with labor shortages due to Covid-19 and a slowdown in operations caused by social distancing measures and quarantines.

On Wednesday, there were two dozen vessels at anchor awaiting entry into either the Port of Los Angeles or the neighboring Port of Long Beach, according to Port of Los Angeles spokesperson, Phillip Sanfield.

"At the Port of Los Angeles, we are actively working on an additional 17 container ships," Sanfield told CNN Business. "Pre-pandemic, we would be working about 10 container ships with no container ships waiting to enter."

The port processed the equivalent of nearly 800,000 20-foot containers last month — the busiest February in its 114-year history.

Companies feel the strain


Companies from Under Armour (UA) and Hasbro (HAS) to Dollar Tree (DLTR), Urban Outfitters (URBN) and Crocs (CROX) have all warned about the supply chain crunch recently, pointing to container shortages, port congestion, rising shipping costs and logistics challenges.

Costco (COST) said earlier this month that it was having trouble stocking imported cheeses because of a shortage of shipping containers and bottlenecks.
An analysis of 7,000 company earnings calls globally in January and February by S&P Global Panjiva found that more than a quarter mentioned "freight," 37% mentioned "logistics" and half discussed supply chains.

"We know that the freight pressure across retail is here to stay and we've built that into our future plans," Mark Tritton, the CEO of Bed Bath & Beyond (BBBY), told investors in January.

Aston Chemicals, a UK company that supplies European manufacturers of personal care products, said its shipping costs were 6.5 times more expensive in January compared to November.

"We paid almost $14,000 for a container in January," said managing director Dani Loughran. That was for a shipment from Malaysia to the port of Felixstowe in England, which just two months earlier had cost $2,100.

Peloton blamed US West Coast port delays for causing "longer than acceptable wait times" for the delivery of its high-end exercise bikes. The company told shareholders in February that it's investing over $100 million to expedite deliveries by air and sea over the next six months to improve delivery times.

It's not the only firm resorting to airplanes to move goods that would ordinarily come by boat, as companies scramble to keep up with customer demand.

According to Biesterfeld of C.H. Robinson, a number of durable goods typically transported in shipping containers are being carried in planes, such as toys and games. Companies are "choosing air freight because inventories are so low," he said.

Air freight is more expensive than ocean freight even under normal circumstances and therefore reserved for high-value goods. These costs are even higher at the moment because fewer flights carrying travelers means less available capacity to transport goods, a chunk of which are typically carried in the bellies of passenger planes.

That will only add to the costs facing businesses and could trickle down to consumers before long.

Higher prices on the way


Companies have so far said very little about how they plan to respond to soaring freight rates but there are early signs that import prices are rising.

According to the Bureau of Labor Statistics, US import prices experienced their largest monthly increase in January since March 2012.

"We anticipate strong demand from consumers to continue over the next couple of months and don't see meaningful change in capacity over that short time period," said Biesterfeld.

The cost to move goods by air, ocean, truck and train is now "structurally up" on 2019 and contracts reflect that, he added. "I do think the costs are real and eventually will manifest themselves for consumers," he said.

The extent to which this feeds through to consumer prices will vary from one product to the next. Goods that rely more heavily on imported components will likely cost more. At the same time, if the cost of imported goods rises significantly or these products become less readily available, that could give domestic producers more leeway to increase prices, said Joanna Konings, a senior economist at ING.

Commerzbank analysts said in a note to clients on Friday that the Suez snarl up could cause oil to become more expensive for consumers because of higher tanker rates as a result of the incident.

A satellite image shows the Ever Given and idling ships at the entrance of the Suez Canal.


For Aston Chemicals, the cost increases were so severe that the only option was to pass them on to their customers: businesses that make everyday products such as shampoos, moisturizers and cosmetics.

If those companies in turn decide to hike prices for their customers, in this case retailers, consumers could start to feel the pinch soon, said Konings.

"Most prices along the supply chain have gone in one direction, and that's up, so it has to appear somewhere."

Newsletter

Related Articles

0:00
0:00
Close
London Daily Podcast: London Massive Pro Democracy Rally, Musk Support, UK Economic Data and Premier League Results Mark Eventful Weekend
This Week in AI: Meta’s Superintelligence Push, xAI’s Ten Billion-Dollar Raise, Genesis AI’s Robotics Ambitions, Microsoft Restructuring, Amazon’s Million-Robot Milestone, and Google’s AlphaGenome Update
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Musk calls for new UK government at huge pro-democracy rally in London, but Britons have been brainwashed to obey instead of fighting for their human rights
Elon Musk responds to post calling for the murder of Erika Kirk, widow of Charlie Kirk: 'Either we fight back or they will kill us'
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
USA: Office Depot Employees Refused to Print Poster in Memory of Charlie Kirk – and Were Fired
Proposed U.S. Bill Would Allow Civil Suits Against Judges Who Release Repeat Violent Offenders
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
French Debt Downgrade Piles Pressure on Macron’s New Prime Minister
US and UK Near Tech, Nuclear and Whisky Deals Ahead of Trump Trip
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
Anesthesiologist Left Operation Mid-Surgery to Have Sex with Nurse
Tens of Thousands of Young Chinese Get Up Every Morning and Go to Work Where They Do Nothing
The New Life of Novak Djokovic
The German Owner of Politico Mathias Döpfner Eyes Further U.S. Media Expansion After Axel Springer Restructuring
Suspect Arrested: Utah Man in Custody for Charlie Kirk’s Fatal Shooting
In a politically motivated trial: Bolsonaro Sentenced to 27 Years for Plotting Coup After 2022 Defeat
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
ChatGPT CEO signals policy to alert authorities over suicidal youth after teen’s death
The British legal mafia hit back: Banksy mural of judge beating protester is scrubbed from London court
Surpassing Musk: Larry Ellison becomes the richest man in the world
Embarrassment for Starmer: He fired the ambassador photographed on Epstein’s 'pedophile island'
Manhunt after 'skilled sniper' shot Charlie Kirk. Footage: Suspect running on rooftop during panic
Effective Protest Results: Nepal’s Prime Minister Resigns as Youth-Led Unrest Shakes the Nation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
King Charles and Prince Harry Share First In-Person Moment in 19 Months
Starmer Establishes Economic ‘Budget Board’ to Centralise Policy and Rebuild Business Trust
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Brazilian police say ex-President Bolsonaro had planned to flee to Argentina seeking asylum
Trinidad Leader Applauds U.S. Naval Strike and Advocates Forceful Action Against Traffickers
Kim Jong Un Oversees Final Test of New High-Thrust Solid-Fuel Rocket Engine
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Supreme Court temporarily allows Trump to pause billions in foreign aid
Charlie Sheen says his father, Martin Sheen, turned him in to the police: 'The greatest betrayal possible'
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
Pig Heads Left Outside Multiple Paris Mosques in Outrage-Inducing Acts
Nvidia’s ‘Wow’ Factor Is Fading. The AI chip giant used to beat Wall Street expectations for earnings by a substantial margin. That trajectory is coming down to earth.
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
On the Anniversary of Queen Elizabeth’s Death: Prince Harry Returns to Britain
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Murdoch Family Finalises $3.3 Billion Succession Pact, Ensuring Eldest Son’s Leadership
×