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The premier U.S. ocean gateway complex of Los Angeles and Long Beach is seeing no respite from the tsunami of imports, and other U.S. ports have also been struggling.
Los Angeles and Long Beach have kept hitting new tonnage records in recent months. The port of Los Angeles handled 957,599 TEU in March, more than double the volume clocked up 12 months earlier. While exports advanced 1.5%, imports were 123% higher.
Over the first three months of the year, Los Angeles registered a 44% increase in container traffic. Management expects to process more than 10 million TEU in the current fiscal year, which ends in June – the first U.S. port to break through that barrier.
Long Beach clocked up a 41.2% increase in containers in the first quarter after March produced the port’s busiest month on record. Its TEU count for the month was up 62.3%, fuelled by a 74% rise in imports.
Up the coast, the port of Oakland reported a record surge for March, with import volume up 45% and exports 12% higher. This followed a 26.2% increase in imports in February.
The pressure has been relentless. “The supply chain slowdown we usually see after the holiday season never really happened this winter, and imports are already starting to grow again,” remarked Jonathan Gold, vice president for supply chain and customs polity of the National Retail Federation (NRF). “We’ve never seen imports at this high a level for such an extended period of time. Records have been broken multiple times and near-record numbers are happening almost every month.”
U.S. retail sales, the biggest driver of the flood of imports, have kept rising. They climbed 9.8% from February to March to end up 27.7% higher year-on-year. The NRF predicts April volumes to be 23.4% higher over April 2020. For May and June, it projects increases of 30.6% and 24.9%. That should bring the tally for the first half of 2021 to 11.99 million TEU, an increase of 26.9%.
Without a letup in volumes, ports have not been able to clear their backlogs fully. Their plight has not been helped by a domino reaction of disruptions. What began with a manpower shortage at the terminals led to overflowing warehoU.S.es and storage space on docks, which slowed down the movement of cargo off the terminals, while vessels were piling up for unloading. This was aggravated by shortages of containers as well as chassis. By the end of March, terminal operators in Los Angeles and Long Beach blamed a shortage of railcars as the biggest driver of congestion, with car dwell times doubling to 10 days. Mid-April saw a strike at Universal Logistics, one of the truck operators serving the port complex, which rippled further when longshoremen refused to handle trucks of the company.
The congestion has eased. By early April, 17 ships were waiting for berth space, down from 30 ships in February.
In part this was the result of carriers and shippers shifting traffic to other ports. Some moved over the Pacific Northwest, but a lot of volume has gone to East Coast ports. According to one forwarder, shippers moved imports that landed at East Coast ports by rail or truck to the Midwest and even as far as the West Coast.
East Coast ports have also struggled with congestion. In late February, 23 vessels were anchored outside the harbour at Savannah. This has prompted the Georgia Ports Authority to add U.S.$100 million to its expansion budget for this year. It aims to boost capacity by 20% to be able to cope better with future spikes in traffic.
Some of the congestion at East Coast ports was down to severe weather in February, while rail capacity in the interior emerged as another hurdle. In March, 16 out of 18 intermodal rail terminals in the Chicago area reported increased turn times due to congestion. One week into April, ocean carriers advised customers that there would likely be rail delays in excess of two weeks through the end of the month because of the congestion in Chicago.
Other facilities in the rail network, such as Memphis, also saw escalating congestion. The U.S. rail system is struggling with elevated volumes. They were up 4.5% for the first 12 weeks of the year. In the Southeast, intermodal container volume was 6.9% higher for the first two months.
The ports have tried a variety of measures to improve operations and visibility to allow better planning. At Long Beach a new container terminal is taking shape scheduled for completion before the end of this year. This will add 1 million TEU capacity.
The administration in Washington has announced U.S.$230 million in grants for port projects, with the caveat that to be eligible, projects mU.S.t address climate change or other sustainability issues.
The chiefs of the Los Angeles/Long Beach port complex have warned that their efforts alone will not be enough to avoid further congestion. They are urging rail and vessel operators, warehouse operators and equipment providers to ramp up their game too.
In addition, Gene Seroka, executive director of the port of Los Angeles, has called for a national digitization system for all ports in order to facilitate cargo moves.
With volumes expected to remain strong at least through the first half of this year, if not longer, shippers are bracing themselves for ongoing congestion and delays as the national transport infrastructure is strained to the limits. According to carrier reports, many have signed contracts early this year, with increases up to 50%. This eagerness to secure capacity indicates that shippers expect capacity to remain tight, which suggests continuing high volumes of cargo.
Ian Putzger
