The CEO of one of the world’s largest shipping companies is calling for governments to step in and take action to fix the global supply chain crisis and prevent delays and shortages from rolling on beyond the end of next year.
In an interview with the Financial Times, Jeremy Nixon, CEO of freight company Ocean Network Express, said that local governments need to increase spending on critical parts of the supply chain – including ports, railways, warehouses, and roads – to increase capacity and cope with ongoing demand. Ocean Network Express has a fleet of 220 ships and transports more than 6% of the world’s containerized freight, according to the FT.
The global supply chain network is on its knees. After a fall in shipping demand during the early days of the pandemic in 2020, a surge at the end of that year led to delays, port traffic jams, and blockages across the world. Now, containers are jammed up in ports due to rising demand and a continuing shortage of dockworkers and truckers.
“There needs to be some government support here to maybe switch people out of some parts of the economy where demand is not so strong to more critical parts of the economy where the demand is very strong and important for global supply chains,” Nixon told the FT.
The White House stepped in earlier this month, announcing plans to shift clogged up Southern California ports to a 24-hours-a-day, seven-days-a-week schedule and allow more time to work through the backlog. Experts were skeptical about how much of an impact this would have if warehouses and truck drivers were not following the same routine.
“It’s great that they’ve chosen to do something, but we’re talking about a less than 1% to 2% change here,” Brian Whitlock, a supply chain analyst at Gartner, told Insider’s Grace Kay. “The work that they’re talking about here is going to be immaterial. It probably won’t even be visible.”
Nixon told the FT that he hadn’t seen any immediate impact from the US government’s announcement. He also said that we can expect more disruption next year at US West Coast ports as contract negotiations are scheduled to take place between dockworkers and terminal operators, which has historically led to delays and backups.
Some retailers and manufacturers reportedly already have plans in motion to reroute cargo from those areas around that time to avoid these delays.
“If we get a bad jam up in July, August, and September of 2022 in North America that could well last late into 2022 and early 2023,” Nixon said.