Site icon SHENANDOAH

The Supply Chain Container Mess has Not Been Fixed

Everyone come with me in the way back machine to the time of October 2021 where the President of the United States declared he was going to fix the Port of Long Beach/Los Angeles container bottleneck:

Of course he doubled down on this when he declared the problem fixed and his insane policies were going to fix inflation while speaking at the Port of Los Angeles on June 10, 2022:

The reality is that dwell times at the Ports of Los Angeles has only declined proportionally to the decline in the number of containers coming in from Asia due to the Covid outbreak in China:

American Shipper highlights the growing problem in an article from July 4th:

California ports piling up again: Too many containers sitting too long

So what happened? In reality the dwell times did drop since last October if one uses the statistics used by the ports and the Biden junta to declare victory over the problem. The reality as the article states is quite different in this excerpt:

The two ports said last Friday that the fee would be delayed again due to a combined 31% drop in aging containers since late October. But if you run the numbers with a different start date you’ll get a very different picture.

The combined number of import containers at both ports dwelling for nine days or more has more than doubled since early February, to 48,932 as of Wednesday.

This is almost exactly the number of containers dwelling on Los Angeles and Long Beach on Nov. 15 (48,905), back on the day the fee plan was originally to be implemented.

This chart from the article tells the tale of the tape:

Chart from American Shipper

In other words, nothing really has changed. The detention fees have been delayed again to try to accommodate the problem for the shippers are railroad capacity has remained stagnant. The threat of recession has also postponed many company plans to expand capacity in California thus moving the containers over the road via trucking will not work either. Add in the implementation of the stupid AB5 law and a nightmare scenario for America’s manufacturers and retailers is in place for the third and fourth quarters of this year.

Meanwhile in Oakland, CA the slashing of the free time or dwell is being reduced in an attempt to create more space at the port there (from CNBC):

Congested Port of Oakland slashing free wait time for import containers

The theory is that by imposing government penalties capacity that doesn’t exist will intimidate transportation companies to call in magic unicorns to move the stacked up containers to their destinations. Penalizing corporate America is hardly an incentive to work with or fix problems, especially when it decreases the profitability of handling this traffic in the first place.

The supply chain bottleneck has not been cured by the Biden team nor was anyone grounded in reality expecting it to get better. With trucking costs increasing due to the price of diesel fuel and profitability outlooks being cut due to the projected upcoming recession, no one should expect this problem to go away any time soon.

Remember, all of this is happening without the ILWU not going on strike yet at America’s Pacific coast ports. Should that happen, all bets are off as to what will be next in the economy as inflation will enter into a shortage induced death spiral higher.

Article Sharing:
Exit mobile version