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Beleaguered Freight Supply Chain Showing Some Signs of Improvement

Up and down the delivery supply chain, from shipping containers and port backlogs to getting packages to customers, there seems to be some light at the end of what has been a fairly dark tunnel.

This year, shoppers should expect typical seasonal dips in on-time performance, but nothing like the “Shipageddon” experienced last year, according to delivery experience management firm Convey by Project44, whose new data encompasses fulfillment times, shipping delays and on-time performance of FedEx, UPS and USPS for the Cyber5 week that includes Black Friday and Cyber Monday.

USPS has had a strong showing so far, while fulfillment delays and FedEx performance are emerging as areas to watch, Convey by Project 44 said. Based on tens of millions of packages shipped from more than 500,000 locations across the US., key findings for the week of Nov. 26-Dec. 2 showed that supply chain issues reached all the way to the consumer’s front door, as the average fulfillment time has more than doubled so far this holiday.

Fulfillment time, defined as the period between when an online order is placed and when the package is picked up by the carrier, has more than doubled year-over-year. For the week, average fulfillment time was 3.01 days versus 1.31 days for the same period in 2020. This indicates that labor shortages and inventory issues are having a real impact on both retailers and holiday shoppers, and indicates that shoppers should expect packages to take even longer than anticipated this holiday season, Convey by Project44 noted.

FedEx delivered 64 percent of packages on time for the week, down from 75 percent during the same time period last year. On-time performance for UPS was 83 percent in the period compared to 81 percent in 2020. USPS had the highest on-time delivery rate at 89 percent from 79 percent in 2020.

At the ports, supply chain visibility data tracked by Project44 indicate that berthing delays are causing a huge build-up of export containers within port terminals and creating a big spike in container dwell times globally. Berthing delay is defined as the time it takes a ship between its arrival at anchorage till the time it is berthed to commence cargo operations.

According to the latest data from Project44, export containers at the Port of Los Angeles took an average of 11.85 days to be loaded on a ship between October and November, while Port of Long Beach took an average of 10.98 days. With export containers taking about twice as long to move through U.S. West Coast ports as import containers, the problem appears to be getting containers off of docks and onto ships.

“If a carrier advises its customers to deliver export containers at a certain date and time based on the ETA/berthing schedule of the ship and that ship’s berthing is then delayed, then there will be a build-up of export containers waiting inside the port for the ship,” Josh Brazil, vice president of data insights at Project44 said. “This appears to be what’s happening, based on the data we’re seeing. Export containers are subsequently waiting in ports for ships, which are taking longer than expected to arrive. As of this release (on Dec. 7), while dozens of container vessels are slow steaming far off the California coast, we are seeing close to 37 container ships close to shore waiting to berth at these ports and it’s these long queues that are pushing up dwell times on export containers.”

While vessel traffic data tracked by Project44 shows a drop in waiting directly outside the ports of Long Beach and Los Angeles in the second half of November, Brazil warned that this could be due to the change in the definition of the “waiting zone” based on the new berthing queue system implemented by the San Pedro Bay ports.”

While the U.S. port data shows a dramatic increase in the export dwell times, many of the other main ports tracked around the world paint a different picture, with South East Asian ports like Singapore and Hong Kong showing marked decreases in export container dwell times.

Further down the pipeline, a global survey published by Container xChange showed that the majority of the container logistics industry is rethinking its logistics strategy in the next year.

Key findings from the xChange Industry survey were that 65 percent of respondents said their performance will either deteriorate further or seem to remain the same in 2022. The top challenge that the respondents experienced to conduct business was finding slots on vessels, followed by surcharges by the carriers and labor shortages.

When asked what alternatives compared to getting equipment from carriers attracted them, 50 percent of respondents said they resorted to one-way leasing followed by long-term leasing contracts and buying containers.

Overall, 71 percent of respondents said they were rethinking their logistics strategy and they are looking for more diverse sourcing and are resorting to holding more inventory.

The main causes of container shortages this year, according to the respondents, were shippers using boxes as storage, container line failures, inefficiencies in matching box owners to potential users and longer transit times and port congestions that made container rotation slower.

When asked “who emerged as the biggest winner of the global supply chain crisis,” the industry unanimously echoed the opinion that container lines benefitted the most out of the disruptions, followed by shippers and freight forwarders.

“We foresee that Covid-19 and its new variants will continue to disrupt the port operations and labor capacity as we progress into the year 2022,” Christian Roeloffs, co-founder and CEO of Container xChange, said. “Persistent unpredictability is warranted. We’ve also started to observe container prices and leasing rates going down. Once prices slide significantly, they risk crashing. If we look at the current demand, we see that the demand for containers hasn’t increased significantly.”

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