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Category: Global Supply Chain

Global Supply Chain News: From Bad to Worse in Global Container Shipping

 

44 Ships Anchored Outside LA/Long Beach Port Complex, versus None or One in Normal Times

 

 

Aug. 31, 2021
SCDigest Editorial Staff

It just keeps getting worse for global shippers, especially those trying to bring containers into the US.

Supply Chain Digest Says...

 

apparel giant VF Corp. recently said it estimates it will spend an extra $35 million on air freight this year versus 2020.

 
 

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Bloomberg reported this week that an amazing 44 container ships were anchored in the Pacific Ocean and awaiting a berth outside the Los Angeles and Long Beach California port complex as of late Friday.

That tops the previous high of 40, seen in February of this year, since the start of the pandemic in March 2020, according to groups monitoring shipping activity at the ports.

A few months ago, the number of container ships at anchor at the two ports, which together handle more than a third of all US container imports, had fallen to just nine ships. In normal times, the number of ships waiting is zero or maybeone or two.

The average wait time for ships to be unloaded also rose to 7.6 days, from 6.2 in mid-August, according to data from the Port of LA.

It’s a problem for many US ports struggling under the surge of containers. For example, there was recently a dozen ships anchored off the Port of Savannah in Georgia.

The delays are the product of several factors, including record high container imports, which have caused not only long queues in port operations but also in trucking and rail transport providers that move the growing piles of containers away from the ports to their destined markets.

For instance, APM terminals at the Port of LA (APM is owned by the same company that owns giant container carrier Maersk Line), said recently that containers are being stored for an average of 9-10 10 days before they can move inland, versus a pre-pandemic average of two to three days.

Currently, the back-up is exacerbated by shippers bringing in holiday-season imports earlier than usual to cope with the delays and variability – which of course ironically is itself adding to the current delays.

Some retailers and brand companies are turning to more expensive air freight to avoid to avoid the ocean shipping woes.


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For example, apparel giant VF Corp. recently said it estimates it will spend an extra $35 million on air freight this year versus 2020. That means air cargo rates are also soaring with the jump in demand.


For Asia to US air freight, rates have risen 24% over the past year, to $7.66 per kilogram.

COVID is also still a factor. Last week, Mike Witynski, CEO of discount retailer Dollar Tree, said that one of the dedicated ocean container ships it charters was recently denied entry into China because a crew member tested positive, forcing the vessel to return to Indonesia to change the entire crew before continuing, he said.

Overall, the voyage was delayed by two months.

Things should get better in October as imports for peak season subside – but just how much better remains to be seen.


What are your thoughts on the backlog at US ports? Let us know your thoughts at the Feedback section below


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