Port Congestion Update
Fiscal stimulus, and falling inventories are creating a new demand for consumer goods. However, transport supply is under pressure to deliver as longer delays seem somewhat imminent. Although optimistic, sourcing professionals are watching the situation closely. With demand exceeding supply, container availability at an all-time low and the cargo bottleneck (which has persisted since November) still in play, all eyes are focused on what’s next.
At least 19 container ships were anchored waiting for entry into Los Angeles and Long Beach last week with another 15 container carriers on the way. Eleven of those will drop anchor and join the queue. Though slowly improving, the average wait for berth space remains between 6.1 and 6.6 days. That number peaked in April at around 8 days. Port officials are now in a race against time to clear the backlog as the height of season approaches.
Overall, the Port of Los Angeles is reporting strong numbers. Year-to-date, overall cargo volume in the first four months of the year increased 42% compared to 2020 with the port processed 3,539,397 TEUs (twenty-foot equivalent units).
Gene Seroka, The Port of Los Angeles’s Executive Director, discusses more of the record breaking numbers:
High freight rates remain a concern and a strong indicator the steel container shortage is here to stay. Nearly 90% of global goods are shuttled in this manner and port delays coupled with an overall reduction of export usage creates an extended lag.
Though manufactures have since ramped output, the pandemic surge caught many off guard. As a result, the critical container shortage is expected to continue well into the second half of 2021 as the economy recovers and demand for Chinese goods remains strong.
The Drewry World Container Index indicates the cost to ship a container of goods from Asia to the U.S is strongly rising with a composite index increase of 7.1% or $408 this week, remaining 297.8% higher than a year ago.