The backlog of container ships off the coast of Southern California keeps growing, writes The Wall Street Journal (Jan. 25, 2022). The queue of vessels waiting to enter the port complex rose past 100 during December, and reached a record 109 ships in early January.
The factors that triggered big bottlenecks earlier in 2021 have continued into 2022. Ships can’t unload quickly because terminals are full of containers. Truckers can’t pick up loads due to a shortage of drivers and the steel trailers used to pull boxes. Warehouses near the ports and at nearby logistics hubs are short workers and don’t have space for more deliveries. The backups are exacerbating supply-chain delays and driving up shipping costs that are contributing to inflation reaching its highest level in decades.
The ports (in LA and Long Beach) have made some progress in recent months in speeding up the movement of some import containers from terminals to truck yards and warehouses. Rather than freeing up space, however, the boxes filling up the dockside terminals have been replaced with empty containers waiting for shipment back to Asia. Five to 10 of the 35 ships at berths on a typical day aren’t being unloaded because terminals don’t have space to put the boxes. Congestion has gotten worse in recent weeks because of a surge of Covid-19 cases among longshore workers, truckers and warehouse staff.
The backlog in Southern California has pushed importers to search for alternate ocean gateways. FedEx recently launched a charter service carrying up to 300 containers to Port Hueneme, Calif., a small gateway 80 miles up the coast. Import volumes at Gulf and East Coast ports rose during the second half of the year as West Coast volumes declined, suggesting a shift to less congested parts of the country. Now, container ships are starting to back up at those ports too.
The Biden administration has tried for months to reduce backlogs, especially at LA and Long Beach, which together handle about 40% of U.S. container imports. Biden announced in 2021 that terminals in Southern California would operate around the clock to speed the flow of containers to manufacturers and retailers, but the initiative failed.
Classroom discussion questions:
- Table 11.3 in your Heizer/Render/Munson text lists 10 supply chain risks and tactics. Which apply to this situation?
- Which risk reduction tactic was taken by FedEx?