Chronic Shipping Delays Force Companies to Rethink ‘Just-in-Time’ Logistics

The percentage of container ships arriving on schedule is below 60% worldwide, forcing companies to reconsider their inventory strategies.

In addition to ongoing rerouting around the Red Sea and the Suez Canal due to worsening conditions in the Middle East, congestion at major ports is causing widespread disruptions. With delays becoming the new normal, more companies are maintaining safety stock.

According to shipping research firm Sea-Intelligence, the global schedule reliability rate for fixed-route container ships stood at 57.5% in March. While this is an improvement from the roughly 30% seen in 2021, when the COVID-19 pandemic plunged logistics networks into chaos, the delay rate remains high.

Container shipping has traditionally been a reliable form of international transport. Ships alternate on predetermined routes, and their operation has often been compared to fixed-route buses. Schedule reliability rates have stayed between 70% and 85% since the late 2010s.

This reliability began to crumble during the pandemic. As port and land transportation workers contracted COVID-19, port functionality declined. Meanwhile, rising demand from people in lockdown in the U.S. and Europe led to increased cargo traffic, which in turn caused port congestion and chaos in logistics networks. Schedule reliability plummeted to 30.4% in January 2022.

As economic activity normalized, schedule reliability rates temporarily recovered until 2023. However, the rebound stalled at the end of 2023 with the deterioration of conditions in the Middle East. Iranian-backed Houthi rebels in Yemen repeatedly attacked commercial ships in the Red Sea, prompting major shipping companies to suspend transit through the area.

The Red Sea connects Europe and Asia via the Suez Canal, making it critical for maritime traffic. To avoid it, ships must pass around the Cape of Good Hope at the southern tip of Africa, adding 10 to 15 days to shipping times.

Longer transit times have raised concerns about a shortage of container ships, leading companies to ship earlier to ensure inventory levels. The increased cargo volume has overwhelmed ports, worsening schedule reliability. It had recovered to about 65% by mid-2023 but fell again, hovering around 50% in 2024.

With five years of disruptions since the pandemic, delays have affected companies’ transport planning. “Shipping companies have no choice but to adapt to delays and volatile rates,” said a representative from Tokyo-based Transcontainer, which handles small-scale consolidated shipments. “There’s a growing trend of maintaining safety stock.”

The “just-in-time” model, where companies could keep minimal inventory, was based on reliable international logistics. With container shipping—the backbone of maritime transport—struggling with schedule reliability, more companies are reassessing their logistics strategies.

Operational burdens are also increasing. “Business operations have become more burdensome,” said Akiyoshi Kawashima of Shippio, a company offering cloud services for trade. “For example, companies need to check each vessel’s movements with shipping lines at every stage.”

There are doubts about whether the situation will reverse. “Although ships are getting larger, the capacity of ports and land transport can’t be expanded as easily,” said a major shipping company employee. “Structurally speaking, bottlenecks have become more likely.”

Frequent port strikes driven by global inflation also contribute to delays.

Uncertainty in the container ship market was further worsened by tariff policies from U.S. President Donald Trump’s administration. The imposition of tariffs in April led to a sharp drop in cargo shipments between the U.S. and China, prompting shipping lines to reduce sailings to avoid a freight rate collapse.

As tariffs were temporarily reduced amid progress in U.S.–China trade talks, shipping volumes rebounded quickly. According to the Shanghai Shipping Exchange, on May 16, the spot rate to ship a 40-foot container from Shanghai to the U.S. West Coast rose by $744 from the previous week to $3,091—a 32% increase. This was the most significant jump since the 43% surge in the second week of January 2024, when Middle East tensions disrupted global shipping networks. The rate for shipments to the East Coast rose 22%.

According to Vizion, a U.S.-based container tracking service, the number of bookings doubled compared to the period before the U.S.–China agreement.

This means port congestion could worsen further. If trade is rerouted due to the tariff war and shipments suddenly surge at specific ports, it could trigger a new wave of disruptions in container logistics networks.

Source: Valor Econômico

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