Sluggish Supply Chains and Packed U.S. Ports – Why it’s Happening
While the world waits for COVID-19 vaccines to become available, the effects of the pandemic continue to ripple across the globe. The freight industry has been particularly burdened by the pandemic’s fallout, and the holiday season is increasing the strain on the already overloaded global supply chain.
Sluggish Supply Chains
The global supply chain is a massively complex beast, and the world’s current predicament continues to add gasoline to the fire. The freight industry has developed practices that helped goods flow fairly smoothly in the past, but those same practices are now causing additional strain due to a massive increase in demand.
Previous methods of positioning cargo based on trends and predictions has added more congestion to ports that are already having difficulties with emptying out space for arriving shipments. Meanwhile, blank sailings continue to tax the shipping industry as Asia’s need for empty containers to export their goods has resulted in many ships refusing full containers from ports, opting instead to carry empty containers to China and the Far East for higher prices.
Complicating matters further is the issue of inland transport and storage shortages as well as the difficulty of scaling capacity to meet short-term demand. The pandemic’s impact on consumers has led to a massive increase in online shopping, creating greater strain on the global supply chain as it scrambles to adapt to these changes.
The concern of future COVID outbreaks is also playing a role as many ports have increased safety measures that are resulting in processing slowdowns. Port capacity is also an issue, especially in the U.S. and China where the ports have not been able to escape these times unscathed.
Packed U.S. Ports
The resurgence of COVID-19 cases in the United States has resulted in further port congestion, especially for the ports in Los Angeles and Long Beach. The delays are leading to increased costs for shippers, often in the form of demurrage and detention fees.
Sudden surges in demand have added more strain as the holiday season continues to charge along at full steam. The Port of Oakland has seen a 10.4% year-over-year rise in imports and this October was the Port of Los Angeles’ busiest month in its 114 years of operation. According to the Pacific Merchant Shipping Association, which has tracked container transport data since 2016, containers remained at LA and Long Beach ports in October for an average of nearly five days—the longest average ever recorded.
The West Coast has been hit hardest, but East Coast ports have experienced their own troubled waters as increased import volume has strained rail capacity, resulting in higher prices.
Ports have been hiring more workers and increasing overtime to compensate for the short-term surges in volume, but most industry analysts predict that things will start to settle down once we get over the current hump. When that will happen is up for debate, but expectations are that import volumes should die down after the Lunar New Year in February 2021.
Contact the experts at Clear Freight today to discuss any issues you might be experiencing with your supply chain and logistics.