Thomson Reuters
- In an interview with Bloomberg, the CEO of Freightos walked through what is causing shipping delays.
- Your favorite brands are paying 10 times the typical price of shipping your stuff across the ocean.
- It could take years to build enough ships to catch up with demand, Bloomberg reported.
- See more stories on Insider's business page.
The founder and CEO of online freight-booking platform Freightos walked through the main challenges fueling the global shipping crisis in an interview with Bloomberg on Tuesday.
"It's simple," Zvi Schreiber said. "Americans are buying more stuff."
The demand for imported goods is so high that shipping companies are racing to build more boats, a construction process that could take several years.
"These are big big ships," Schreiber told Bloomberg. "So when Americans suddenly change their buying habits … it's going to take the industry a while to catch up."
The 2-day-shipping many customers have become accustomed to depends on a global supply chain that allows brands to transport products across the ocean and onto your doorstep.
Now, brands are paying 10 times the price of typical shipping costs - and some companies can't even get products onto a boat in the first place.
Brands are taking drastic measures to sidestep the crisis. Home Depot contracted its own ship in hopes of avoiding delays and rising prices. After a year of customers complaining about month-long delays, Peloton spent $100 million to expedite deliveries.
"The pandemic broke the supply chain last year, and the shipping companies that move stuff all over the world still haven't recovered," Insider's Rachel Premack reported in June.
Schreiber told Bloomberg that while large corporations like Walmart can leverage company connections to place its orders on mega-ships in time, smaller and mid-sized brands get "squeezed out."
In order for the world's shipping system to function, three elements are required: massive ships, containers on the ships, and places for the ships to park so that the containers can be unloaded.
While the price of shipping containers has skyrocketed, Schreiber said that the industry simply does not have enough massive ships to keep up with America's outsized demand.
The only scenario in which Schreiber can foresee shipping timelines returning to pre-pandemic levels is if people start ordering fewer things.
"It's hard to predict the future," Schreiber said. "As restaurants and travel reopen, people may just spend a little less on stuff and that will solve the problem very quickly."