Just when everyone thought it was safe to ship their freight by water again, here we go again.
The news from the West Coast of the US had been improving but now due to a lack of railroad equipment, dwell times and processing times are back on the upswing. From TheLoadstar.com:
Ports and terminal operators are raising the alarm over rising container dwell times caused by lack of rail equipment, which has forced them to slow unloading of containerships.
At the port of Long Beach concerns are mounting that terminals are running out of room to accommodate incoming shipments as boxes stay longer on site before they get moved to the interior.
Average container dwell times at Long Beach rose from 3.5 days in January to 5.2 days the following month, the Pacific Merchant Shipping Association (PMSA) reported. According to the port authority, they deteriorated further in March to about seven days.
The problem is not confined to the port complex of Los Angeles and Long Beachm but has spread up the coast to Oakland and the Northwest Seaports Alliance of Seattle and Tacoma.
The CEO of Restoration Hardware has all but confirmed the supply chain issues remain during an earning report conference call last week:
“Everybody thinks supply chains are getting better. I don’t think they’ve gotten better at all,” Friedman said.
“Product is on the water for a long time, getting ships into port. We’ve got about five extra weeks in our supply chain right now. That’s a lot of time, a lot of money. And that’s the average. Some stuff’s coming on time and some is 10-12 weeks behind.
“Many of us thought we’d have been caught up by now. We’ll be lucky to be caught up by the end of the year,” he said, pointing to heavy omicron impacts on supply chains in China, Vietnam and other sourcing countries.
To be honest, some of the companies I work with are still seeing the same problems, with the average transit time by container via the Trans-Pacific route still be north of six to seven months.
Then of course this happens on top of the existing problems the supply chain is experiencing now (via American Shipper):
Meanwhile, factory and logistics activity in Shanghai has been slashed further with the entire population of 25 million sheltering in place after authorities indefinitely extended a quarantine mandate that was supposed to end Tuesday morning. Officials are trying to test everyone in Shanghai amid a record outbreak of nearly 13,000 cases as President Xi Jinping continues to insist on a “zero-COVID” policy that is wearing out many residents and businesses.
The protracted, spreading confinement measures are likely to cause supply chain disruptions far greater than last year’s partial closures of the ports of Yantian and Ningbo due to limited outbreaks and more on par with the manufacturing blackout that began in Wuhan at the start of the pandemic two years ago, said ocean shipping expert Jon Monroe.
To demonstrate the severity of the problem, this chart shows that now there are just over 300 vessels as of March 31, 2022 waiting to be discharged and reloaded in the port of Shanghai alone:
So why are the vessels still waiting with less than 20,000 total cases city wide? More from the American Shipper article:
Authorities on Friday kept a lockdown in eastern Shanghai beyond the initial five days after mass screening identified too many positive cases and now say residents on the western side will remain subject to isolation rules until case counts decline. The world’s largest container port and Shanghai Pudong International Airport are technically open as workers stay on-site within a bubble, but most factories and warehouses are shut because workers are stuck at home. Truck drivers often can’t cross district lines or go to other cities to move goods, according to logistics companies in the area.
This is not going to end well as inflation accelerates in the US along with interest rates and a collapse of demand.