Businesses operating or dependent on factories based in China faced multiple challenges during the pandemic. Now that the market is taking a break from the unprecedented surge in demand, business owners are exploring options to shift their production outside China.
While this type of transition could benefit large companies, analysts believe it could cause a problem for container carriers.
According to Anne-Sophie Zerlang Karlsen, head of operations Asia Pacific at Maersk, spreading production across multiple locations has the potential to “complicate transportation and could lead to supply chain congestion in Asia,” reports Shipping Watch. She believes the infrastructure of Chinese ports is more capable of handling large volumes compared to other ports in Southeast Asia.
During her participation in the TPM23 in Long Beach, Karlsen said, ”I fear that if this moves too fast we could be in a situation […] where you again will see that infrastructure in Southeast Asia and South Asia will end up becoming new disruptors to the supply chains.”
Similarly, Peter Levesque, CMA CGM’s new North America President Peter Levesque, spoke about the risk of relying on China only for product sourcing. According to the Journal of Commerce (JOC), Levesque noted that carriers need to take advantage of the trend to shift production to other countries by investing in “terminal deals and new vessel services.”
“The shift is definitely on,” Levesque told attendees at the JOC’s TPM23 conference. “It started with the trade war, and COVID just accelerated the shift. Customers realised that they had their sourcing eggs in one basket.”
While China continues to hold the biggest share in terms of sourced production, experts believe Vietnam, India, Africa and South America could also become popular sourcing hubs for the US.
