Virtually every U.S. port is expected to process individual records for TEU volume in 2021. To highlight one of the most extreme examples, the ports of Los Angeles and Long Beach are set to handle more than 20 million TEU by the end of this year, shattering their previous record of 17.5 million TEU set in 2019. Based on throughput statistics alone, it is clear that the capacity crunch is not going to ease anytime soon.
Making this historic time even more challenging, there are over 65 fully loaded container vessels waiting to berth outside of LA-Long Beach. 23 are drifting in the San Pedro Bay with nowhere to anchor. Scores of other vessels waiting to berth at other multiple ports around the United States. To put that into perspective, on an average day pre-pandemic outside L.A.-Long Beach, there are usually just 16 vessels in line to be processed. Savannah, GA, although nowhere near as congested as L.A.-Long Beach, is also being bombarded by new ships desperately looking to avoid coastal congestion and unload cargo.
“As the strain on capacity continues to grow, some industries that historically never had a space issue before will have to get their orders in now if they are to have any chance of getting their products into stores in time to meet deadlines,” said Anthony Fullbrook, President of OEC Group’s Northeast Region. “Shippers need to accept that capacity restraints are here to stay, meaning that planning ahead will become the critical skill for success. Those that plan ahead better will thrive, while the others will continue to struggle.”
Across the board, industry experts agree that market conditions will not let up for the foreseeable future. According to Alan Murphy, the CEO of Sea-Intelligence, global capacity has been effectively reduced by ten percent due to congestion issues, more than 20% shrinkage of effective capacity is being felt on trans-Pacific routes, and lanes between Asia and Europe are effectively down by between 12 and 13%, again, due to land-based congestion. What makes these statistics even more troubling is that trans-Pacific capacity has been boosted by 20-25%, but effective capacity is still diminished.
Reverberations from these delays are also being felt on the supply side in China because empty containers are not being returned on time. This lack of empty containers on the supply side will soon make transporting goods across the Pacific Ocean even more difficult.
“In order to get the market more fluid and less congested, shippers need to rethink their supply chain strategy,” said Peter Hsieh, Vice President of Sales and Marketing for OEC Group’s Northeast Region. “However, with all the supply chain complexities in today’s market, I would advise they seek help from experienced professionals who have a long history of successfully organizing clients and moving their cargo in these extreme conditions.