International logistics a bottleneck for growth in Finland's foreign trade
Rapid growth in the world economy has led to a severe imbalance in import and export logistics for Finland’s foreign trade. Although there are now plenty of exports, there are not enough imports to cover the transport needed for exports.
A similar imbalance is plaguing the entire global logistics market. Strong growth in the USA is eating up containers, especially between the US and Asia. Many large container ports in China, the US and Europe are severely congested. In many places, container ships have to wait outside port for several days before they can unload their containers and pick up new ones.
In order to avoid delays, shipping companies are sometimes skipping port calls completely or redirecting their traffic to alternative ports in order to stick to their original schedules as closely as possible.
As major container seaports struggle with congestion, the poor availability of inland road transport in many key markets has also contributed to congestion in international logistics. According to an estimate made by Transport Intelligence in August 2021, there is a shortage of about 400,000 drivers in Europe, which is making it even more difficult to ease container congestion at ports. According to press reports, the chronic shortage of heavy goods vehicle drivers in North America has pushed inland traffic to the brink of crisis.
In practice, the challenges being faced in maritime and inland logistics have significantly increased container turnaround times in all key markets, which has led to amajor and cumulative problem with regard to the availability and sufficiency of containers.
One container shipping company has reported that their average container turnaround time has increased from 50 to 60 days during the coronavirus pandemic, and that one day means about 35,000 containers to them. In other words, the slowdown in container traffic has led to a shortage of 35,000 containers, as the containers are spending longer in transit.
Global demand for containers currently exceeds supply. As a result, both container availability and prices have increased multifold compared to just over a year ago, when strong growth in the US and Chinese economies began. For more than a year, companies operating in Finland, and particularly SMEs, have found it difficult to obtain empty containers for their imports and exports. The situation is particularly challenging for Finland’s foreign trade exports, as imports are not bringing in enough containers. Even under normal circumstances, Finland has had to import a significant number of empty containers to cover its export needs.
In general, those following the sector believe that global logistics will continue to face challenges well into the second half of 2022, and even in 2023. The transportation required by Finnish businesses can definitely be handled by the forwarding and logistics sector, but it will take more work and time than usual. Importers and exporters should therefore be prepared to keep an eye on this for the rest of both this year and next.
Petri Laitinen is the Managing Director of the Finnish Freight Forwarding and Logistics Association and the logistics sector manager of Service Sector Employers PALTA.