Editorial · March 9, 2021
Container Shipping Delays: Planning Around Port Backlogs
Container shipping delays are now the biggest planning problem for many small importers. The Port of Los Angeles, the busiest container port in the country, reported 62 ships waiting at anchor in mid-February 2021. Ships there waited about 8 days on average for a berth. In November 2020 the wait was about 2.5 days.
If you buy goods from Asia, your order is probably late or will be. This note explains why, and what you can do about it.
Why ships are waiting
The main cause is a surge in imports. Many people stayed home and bought goods instead of services. Cargo arrived faster than ports could move it. The Port of Los Angeles said January volume rose 3.6 percent from a year earlier. For the whole San Pedro Bay area, which includes Long Beach, the rise was more than 11 percent. That was the sixth month in a row of year-over-year growth.
The port said about 85 percent of ships at anchor were waiting for terminal space. It was handling 15 ships at once, up from the usual 10 to 12. Terminals ran above 90 percent of capacity.
Illness also slowed the docks. About 800 of the port's 15,000 longshoremen were out in February with COVID-19 illness or quarantine. Western Overseas also said warehouses in Southern California were close to full, so boxes had nowhere to go once unloaded.
Sources: Maritime Executive, February 17, 2021, reporting the Port of Los Angeles monthly update; Western Overseas, February 25, 2021.
An empty box problem
The United States sends far less cargo out than it brings in. The Port of Los Angeles said exports were down in 25 of the previous 27 months. Empty containers leaving the port were double the number of loaded exports. Carriers want those empties back in Asia quickly, because a box there can carry a new load of goods.
That rush has a cost for exporters. Some carriers were turning down export bookings in favor of getting empties home. If you ship farm goods or other products out of the United States, expect fewer slots and higher rates.
Source: Maritime Executive, February 17, 2021.
What the port and carriers are doing
Some carriers are changing routes. Hapag-Lloyd adjusted schedules to use other ports, and CMA CGM moved an express service to Oakland. Diverted ships can add cost and transit time, so a different port is not always a fix. The port's executive director, Gene Seroka, said the port needed to meter the cargo or ships could stay at anchor into the summer.
Carriers cannot simply add ships. Hapag-Lloyd's chief executive said nearly every available vessel was already at sea. Western Overseas, a freight forwarder, expected congestion to last until late May or early June, with imports staying high through June and July.
That is a forecast, not a promise. Plan for it to run longer.
Sources: Maritime Executive, February 17, 2021; Western Overseas, February 25, 2021.
How small importers can build slack into orders
You cannot make a ship move faster. You can change how much a delay hurts you. These steps are low cost.
- Add weeks to every lead time. If your supplier ships in 30 days and the sea trip used to take 3 weeks, add at least 4 to 8 more weeks. Ships at anchor wait about a week before they even reach a dock.
- Order earlier, and in fewer, larger lots. Each shipment faces the same queue. Fewer shipments mean fewer chances to be late.
- Keep a safety stock. Hold extra units of your best sellers. Count the cost of storage against the cost of empty shelves.
- Ask your forwarder about other ports. Oakland and Seattle took some diverted ships. Ask what the extra trucking or rail will cost.
- Watch fees. Longer dwell times raise the risk of detention and storage charges. Ask your forwarder how many free days you get and what comes after.
- Tell your customers. A clear delivery date, even a late one, keeps trust better than a missed one.
- Get quotes in writing. Ocean rates were rising, so ask how long a quote holds.
Pick your top three products first. Those are the ones where a stockout costs the most.
Source: Western Overseas, February 25, 2021, on dwell time, detention exposure and diversions.
What to watch next
Three numbers tell you whether things are getting better. The first is the count of ships at anchor, which the Port of Los Angeles reports each month. The second is the average days at anchor. The third is monthly import volume. The port projected February imports of 730,000 containers, up 34 percent from a year earlier, and expected more growth in March.
The port is also trying to protect its workforce. It said it hoped to vaccinate about 15,000 longshoremen and 80,000 to 85,000 port-related workers. Fewer sick workers means more boxes moved each day.
Until the backlog clears, treat every ocean date as an estimate. Build your plan around the slower date and be glad if goods come early.
Source: Maritime Executive, February 17, 2021.
Sources
- Maritime Executive, "Los Angeles Addresses Backlog and Diverts Ships as Volumes Rise," February 17, 2021.
- Western Overseas, "Congestion, Container Shortage Continues," February 25, 2021.