Supply chains around the world are jammed. California has seen record breaking queues for container ships despite not being in major ports.
According to Long Beach’s mayor, California: “In light of major pandemic production shifts worldwide and long-standing supply chain challenges, we are experiencing an unprecedented cargo surge at Long Beach and Los Angeles ports.”
So, what is causing all the chaos?
Satellite imagery shows a large number of ships waiting for their cargo to be loaded from Long Beach or Los Angeles ports.
Container ships are used to transport goods from Asia to America.
Marine Traffic is a ship-tracking site that counted over 50 containers ships from Long Beach and Los Angeles as of 13 October.
The September backlog was at an all time high.
These ports receive the majority of China’s cargo. As such, congestion can rapidly escalate. Janet Porter is Chair of Lloyd’s List Editorial Board.
The whole shipping process has been slowed. Ships are now waiting for days or even weeks before they can unload their cargo.
Container Trades Statistics reports that 25% more cargo was shipped to America from Asia in 2021’s first eight months than it did in 2019, pre-pandemic. Volumes have mostly stayed the same between Asia-Europe.
There were also queues outside Savannah Port, Georgia on the east coast.
August was the 2nd busiest month.
Transporting goods to shore from overcrowded shipping yards full of containers and a labor force affected by the pandemic is another problem. Supply side: China’s locked down ports and other countries have led to shortages.
Sometimes, you can opt to go on holiday or to dinner.
Overall, consumer goods demand has increased 22% compared to pre-pandemic levels (comparing August 2021/February 2020).
Capital Economics notes noticeable jumps in the imports of toys and games (up 74%) as well as household equipment (up 49%).
Professor Christopher Tang, University of California Los Angeles, explains that there were many factors which led to the increase in imports.
“Currently many ocean carriers carry holiday merchandise, such as billions of dollars in Halloween decorations and billions of dollars worth of Christmas decorations like artificial Christmas trees or Christmas lights.
Prof Tang said that US efforts to recover their economy are a source of demand.
Private firms are encouraging employees to return to their offices in order to do in-person work. There is also a huge demand for office equipment, including computers, printers, servers and other devices. Many of these items have been shipped from Asia in containers.
This equipment is used to upgrade office facilities to lessen the spread of coronavirus.
Prof Tang said that many of the containers contained ventilation equipment and air filters, waiting to be loaded.
Gary Hufbauer is Senior Fellow at Peterson Institute for International Economics. He says there’s a immediate staff problem – the shortage of skilled truck drivers, port workers and train crew to move all the goods.
This reflects not only the Delta version, but also the retirement of truck drivers.
Ms Porter says, “It’s not possible to foresee this massive surge in demand,”
The Californian coast is littered with ships, prompting wider discussion about American supply chains. Since long there have been calls for infrastructure improvement in general.
- To fix more US bridges, an infrastructure bill
White House Chief of staff, John Kelly has stated that the Biden administration will tackle They inherited the “supply Chain Mess”
Experts point out that US ports have problems with logistics capacity, which was already an issue before the pandemic.
This was due to years of insufficient investment. “Port capacity doesn’t deteriorate quickly but there was likely less than 5% spare capacity,” states Mr Hufbauer.
To ease congestion, a taskforce from the White House has been established. The port of Los Angeles will be closed longer in order to alleviate the problem.
Industry experts say they don’t think the backlog will end anytime soon.
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