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A shipping expert believes that the supply chain crisis may last well into 2023 given how global trade has been reshuffled to meet surging American demand.
"We expect... strained supply chains to last until the early parts of 2023," Peter Sand, chief shipping analyst at Copenhagen-based BIMCO, a shipping trade group, told Yahoo Finance Live (video above). "We are basically seeing a global all-but-breakdown of the supply chains from from end-to-end."
In Sand's view, the "spectacular recovery" in U.S. consumer demand the past 15 to 18 months has "completely biased shipping networks."
According to Sand, trade volume between the Far East and North America is "rising so fast" — at about 25% higher than 2019 levels. Global demand has only grown by 5.6% in the first eight months of this year.
"That whole reshuffling of container shipping capacity into service of the American consumers has really strained supply chains across the globe," Sand said.
Mentions of inflation jumped by more than 900% year-over-year
Deep concern over the supply chain crisis is rippling across every sector of the U.S. economy, with more companies — and consumers — fearing a massive crunch during the holiday shopping season.
According to a note from Bank of America, the third quarter of 2021 had the third-highest number of "profit warnings" story counts on Bloomberg, behind only the fourth quarter of 2015 and the first quarter of 2019. Mentions of "inflation" have risen by more than 900% year-over-year, the bank added.
Amid the influx of bad news about the supply chain crisis, freight rates from China have also increased by 20%, as seen in the chart below.
The costs are adding up due to the immense backlog: According to California's Marine Exchange, there are currently 61 container ships anchored and 25 at berth in the areas between Los Angeles and Long Beach, as of Oct. 11.
"Where we do see the most strained part of this is in the hinterland connectivity," Sand said. "From a container lineup perspective, they are basically transporting more cargo than ever before. ... There are some plus 50 container ships just waiting to offload the cargo off the coast of California."
Though big retailers like Costco (COST), Home Depot (HD), and Walmart (WMT) have attempted to circumvent the issue by buying up their own containers or chartering their own ships, they're likely to run into the same main problem when it comes to unloading the cargo.
"If we cut to the chase here, they face exactly the same obstacles once they arrive at the American coastline," Sand said. "They need to wait in line also to discharge that cargo. And they may also face the same shortages of chassies (specialized trailers or undercarriages used to transport ocean containers over the road) and truck drivers once they get the cargo [on] land."
Aarthi is a reporter for Yahoo Finance. She can be reached at email@example.com. Follow her on Twitter @aarthiswami.