The Big Struggle for US Ports - Looking for Alternative Solutions for the Crippling Congestion Affecting the US

A crippling congestion is still causing huge delays to the majority of US ports. What is the reason behind it and where is the light at the end of this seemingly endless tunnel?

2021: another challenging year in sight

Raise your hand if around the end of last year, you expressed, at least once, that you couldn’t wait for 2020 to come to an end. I cannot see you right now, but I am sure you are pointing your hand well up to the sky. Let us be clear, everyone, and specifically all those working in the shipping world were hopeful to start the new year with some good news, particularly related to the congestion that hit a good portion of the American ports starting last summer, a disastrous consequence of the infamous COVID-19. Unfortunately, the hopes quickly faded during the first weeks of 2021. The congestion at the ports didn’t ease at all - on the other hand it even worsened. And at the end of March the situation didn’t show any sign of improvement. The million-dollar question here is: why? 

A Change in Buying Patterns & Frequent Covid Outbreaks

We know very well that the pandemic that hit the US at the beginning of last year, caused an unfortunate series of chain reactions which contributed to this bad congestion. One of these unexpected reactions, is the extreme consumer demand of goods into North America that pushed retailers to heavily restock. This has been mainly caused by the fact that people couldn’t travel or simply go out, as they were forced to stay at home due to the several lockdowns established all over the United States.

Thus, “some people have built up quite nice disposable incomes, and it’s gone into physical goods that are generally shipped in containers” as Simon Heaney, senior manager of container research at the shipping consultancy Drewry stated in a recent interview. Specifically, the e-commerce phenomenon literally boomed in these first months of the year and more online orders, translate into many imports, which in turn mean congestion at the ports and accruing delays with many vessels still idling offshore while waiting to be unloaded.

But this is not the only cause. In fact, even though now the situation with COVID cases is getting slightly better, in January and February, the various terminals and warehouses experienced a spike in absences and illnesses of workers, another pivotal reason for a general slowdown in operations, which obviously caused other streaks of bad delays. Furthermore, another key element that needs to be factored in is surely the lack of containers. The traffic jams that the whole North America is experiencing, are creating a shortage in China, the country in which basically all containers are manufactured. It is also interesting to mention the fact that “new containers are selling now for $3,400, nearly double the typical price”, as announced by Florian Frese, marketing lead at the logistics firm Container xChange. To conclude this short analysis, it is fundamental to highlight the fact, that in normal conditions, we would see a steady decrease in import after the winter holidays and right after the Chinese New Year. After these two important events, we are on the other hand still seeing a massive surge, and this strongly underlines the fact that we really have a unique situation in front of us. 

Choke on the Water

Now that we know what is happening and what mainly caused all this disruption, it is interesting to investigate where this congestion is actually happening. Comparing the two coasts of the United States, we can see that on the East coast the congestion is overall far less, even though we can still observe some heavy traffic, notably at the port of Savannah and, even more heavily, in New York. However, the main problem seems to be specifically related to the port of Los Angeles, the largest container port in North America, that is really experiencing a record volume and on the verge of breaking every record of import levels. In fact, according to the last reports, the port processed 799,315 containers, 20-foot equivalent units (TEUs) just during the month of February, a 47% jump if compared with February 2020: definitely an abnormal increase. Also, it was the seventh consecutive month of year-over-year increases in voolume and the strongest February in the port’s 114-year-long history. In the chart below, you can clearly see the volume of imports for the month of January over the year, starting from 2016 until 2021 for the ports of L.A and Long Beach.

In Search of New, Creative Solutions

As you all know, the previous year has really tested us and if there is one thing we learned, it is to be flexible and really think outside the box. And today, these two skills that we have extensively developed are now coming in handy. Let’s face it: the forecast concerning this ongoing port congestion are not so positive. As per the latest estimates, this tough situation on the West coast could last until the summer peak season. What are the alternatives then? We would absolutely need to take a closer look at the performance of each unique port in the US, trying our best to gauge which are the ones with less delays and congestion. In some cases, technology could be our friend, as last September the port of L.A published a new data tool called “Signal”, aimed at automatically distributing important updates concerning the current situation of the port and its related volume. Thanks to this useful tool, all the parties involved in the shipping industry can be instantly updated and easily track the import volumes in Los Angeles, thus making a useful comparison with the previous weeks as well. In fact, now more than ever, in this growing concern that is affecting the whole international trade, we really have to be at the top of our game and be as open as possible to new, growing innovations and helpful technologies (as the last mentioned) that can help us to keep better track of the overall situation. And who knows, maybe in the future all this will be simply remembered as the real booster of the innovation within the world of logistics.