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Euro Area Retail Trade

This is a good illustration of one of the drivers of bottleneck problems in container shipping.

The data shows the development in retail sales in the Euro-area as an index with 2015= index 100. Eurostat has made the index seasonally adjusted.

The newest data includes June 2021.

Overall retail sales in June are up 5.9% compared to June 2019 before the pandemic indicating an annual average growth since then of 2.9%. Such a growth rate in itself should not give rise to problems.

However, notice the extreme volatility in the data following the pandemic. This is one of the elements triggering the problems in container shipping.

With a normal smooth flow of cargo, carriers, ports and hinterland operators can plan and execute the supply chain normally. Rapid swings, however, are much more difficult to absorb as this requires significant surge capacity to be available.

When retail sales start to fluctuate dramatically, this leads to fluctuations in the physical flow of cargo. Such fluctuations give rise to bottleneck problems. Think of this in an over-simplified manner: A normal cargo flow through a given port is 10,000 TEU every week. Suddenly there are 3 weeks of only 5,000 TEU followed by a single week of 25,000 TEU. Seen as a monthly average the volume remained stable at 40,000 TEU but in the second case the fluctuations would cause severe congestion problems.

Making matters worse, disruptions in the physical flow cause importers to change their ordering patterns to safeguard their stock levels – which in turn further increases temporary cargo surges and destabilizes the system even more.

a close up of a graph

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