The recent blockage at the Suez Canal once again highlights the importance of freight visibility, as well as planning ahead with near-real-time updates and taking action whenever possible. Of course, major port congestion has been an issue for months now, with numerous ships sitting idle as they wait to reach a berth and unload.
It doesn’t help that both the Ports of Long Beach and Los Angeles are experiencing unparalleled container increases: LA saw a 47% uptick in containers moved from February 2020 to February 2021; Long Beach handled 43.9% more volume than the previous year — the port’s largest-ever annual increase. The logjam is forcing shippers and consumers alike to wait longer and longer for their orders.
To understand how we got into this situation, let’s rewind to early 2020. When the COVID-19 pandemic hit, ocean carriers correctly predicted demand would drop, causing ships to sit empty. Therefore, they immediately off-hired ships to align supply with anticipated demand and adjusted their sailing plans to reduce costs.
But by the second half of the year, companies saw a dramatic demand acceleration — much faster than anticipated — when carriers realized they needed to reconfigure plans as global economies began to recover. Meanwhile, consumers were driving demand by ordering more products for entertainment, home improvement projects, home office equipment and more — all via e-commerce at an unprecedented rate.
A short while later, the holiday shopping season (the normal peak time) further accelerated demand. At the same time, COVID-19 was affecting the supply chain workforce. Fewer people were working in terminals due to illness or safety measures intended to slow the spread of virus. With a contracted workforce, ships took longer to unload, causing backlogs at ports and tying up containers waiting on ships to empty. All of these events created the exceptional situation we are navigating today: high import volume, decreased terminal productivity, limited vessel space, too few containers, reduced ship capacity and long waits at ports.
Because many of the underlying causes of our current circumstance stem from the pandemic, the high-demand-low-supply situation won’t change until the pandemic ends. What shippers can (and should) do is seek visibility into their freight — where it is and when it is going to arrive. When they have insight downstream to their customers and upstream from their suppliers, shippers can set more accurate expectations for arrival and availability timing, create more efficient plans following arrival, and better adapt to predicted changes or disruptions.
While there has always been a need for visibility solutions, perhaps never more so than over the past year. When shippers have little control, they need greater awareness. As we get people back to health, better-functioning terminals and more available vessels, the adverse situation will begin to alleviate.
To learn more about the process for getting products from factories to stores, reserve your spot for the free Panel Discussion on Ports and Containers on Thursday, April 22nd. It includes Kimberly Daniels, CEO of Merchantile Logistics & International Trade; Dr. Noel Hacegaba, Deputy Executive Director and CEO, Port of Long Beach; and Anthony Otto, President and CEO, Long Beach Container Terminal.
