Shipping Challenges Wallop Industries Around The Globe

HIDA Government Affairs Update

Linda Rouse O'Neill
Vice President, Government Affairs, HIDA

May 2021

Late 2020 bottlenecks were predicted to disappear by March, paving the way for smooth sailing. That hasn’t happened.

Extreme weather, container shortages, port congestion, material scarcity, and staffing shortages due to sick and quarantining workers are problems piling on top of already complex COVID-related logistics.

Multiple Factors Pressure Supply Chains

The disruptions underscore how multiple forces are squeezing the world’s supply chains. They are affecting all industries, not just high-demand medical products. Toyota cried foul in the spring due to February’s Texas storms affecting petrochemical supplies. Honda and Samsung cited the semiconductor shortage for their supply woes. “The pandemic-driven rise in consumer demand for tech goods to a backlog of imports at clogged California ports to U.S. factory outages caused by weather woes” are all factors creating delays and price hikes, reports the Wall Street Journal.

California’s Los Angeles and Long Beach ports, which are two of the biggest in the U.S. that receive shipments of PPE and other medical supplies from Asia, expect the rush and related congestion to continue into the early summer. L.A.’s port experienced a 47% increase in containers from February 2020 to 2021 and Long Beach saw a 44% jump – its largest ever yearly increase, according to media reports. Southern California’s ports are responsible for about 50% of all imports into the U.S. from China.

Pandemic-Related Ecommerce Boom Overwhelms Ports

As COVID kept many consumers at home, they replaced vacations and restaurant meals with video game consoles and cooking and exercise equipment. Port of Los Angeles Executive Director Gene Seroka said at a press conference that there is a shortage of truck drivers and warehousing outside the port to handle the goods from Asia and elsewhere. A Port of Oakland spokeswoman said the surge in e-commerce has significantly increased the volume of incoming cargo – showing that smaller ports are beginning to experience some of the challenges of their larger neighbors as container operators look for alternate routes. Before the pandemic, the total shipping time from Asia to all U.S. destinations was about 30 to 45 days, but by mid-March it’s as high as 95 days.

The surge of exports from China to the west, combined with port disruptions due to COVID has left many shipping containers out of position, resulting in queues of ships at ports and increasing freight rates. A New York Times report in March cited experts predicting the container shortage will continue through the end of 2021. The amount it costs to send a 40-foot container from China to the U.S. has more than quadrupled over the past year, according to the Financial Times. And, even in normal times, the airfreight is approximately eight times the cost of sea shipment – with most airfreight secured in the cargo holds of passenger jets.

No Imminent Relief In Sight

Even as consumers are predicted to ease up on ecommerce as COVID vaccinations become widespread and they venture out more, retailers are going to begin building up inventory for the 2021 holiday shopping surge. And, as new economic stimulus checks get into the hands of Americans, there could be another, separate buying boom.

As one expert summed it up for the New York Times: “You are potentially looking at some shortages for quite some time.”

This article also appears in Repertoire Magazine.