LA Port Congestion Kinks Supply Chains
Cargo ships have been stuck in LA’s ports since the beginning of the year, and the port congestion is only getting worse. There are currently 90 ships in the port and some floating more than 20 miles away waiting to dock. The wait time for container ships to dock can span up to a month. Despite a new 24/7 schedule, experts don’t think it’ll help much as the holiday season approaches.
The US Relies on Imported Goods
The port congestion is the result of multiple problems within supply chains. Almost a year and a half from the initial shut down, companies are still playing catch up while rising Covid-19 cases continue to shut down factories. With increasing reliance on imported goods, the US is dependent on functioning supply chains more than ever. The US imported nearly $43 billion worth of goods from China as of August, compared to only $293 million in all of 1985. Consumers have grown used to instant gratification, expecting just-in-time inventory.
Now that more people are home and shopping online, companies and supply chains can’t keep up. The LA Port is now running 24/7 to help move the backlog of ships and combat port congestion. However, the new plan does not address limited warehouse occupancy and trucker shortages. Now, for every 16 containers, there’s only one truck waiting at the port. A new report also claimed that ‘lazy crane operators’ at LA’s port are causing delays too — IHS Markit data has shown that containers take twice as long to unload compared to their Asian counterparts.
Getting Product to Consumers
Remain Transparent with Inflation and Timelines
With no end in sight, the shipping crisis is a nightmare for companies and consumers. It is critical to remain transparent with customers about cost and timelines. Companies have already passed inflated shipping costs to consumers, explaining that they can’t foot the bill. Consumers have also been advised to start holiday shopping earlier. Having transparent conversations about pricing and delays helps buyers understand the number on the tag and manage expectations for delivery.
Consider Hybrid Shipping
Shipping, unloading, and transit times are taking three times the average compared to pre-Covid for many Blacksmith clients. Trying to avoid the port congestion, some shippers are now sending vessels to the east coast (New York and Savannah). However, both ports are already feeling pressure from the overflow. There are now 24 ships off Savannah and wait times are double the average of 4-5 days. Many shippers are also trying a hybrid of air and sea freight. Though air freight is typically three times the cost of sea shipping, you’ll have product in about a week. However, as the holiday season comes closer, the high cost and competition for space on flights is also a problem.
Blacksmith will continue to update our clients on the shipping crisis. We will continue to offer creative solutions and do everything we can to ensure on-time delivery. If you have any questions, please contact us.