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West Coast Ports Battling ‘Excessive Stress’ into Holiday

A supply-and-demand mismatch has plagued global value chains for months, but now a massive surge in imports at the country’s busiest ports has begun to subside, according to the National Retail Federation (NRF) and Hackett Associates’ Global Port Tracker.

While U.S. ports analyzed by the platform handled 2.19 million Twenty-Foot Equivalent Units (TEU) in July, up 14.2 percent from the year-ago period, that double-digit growth has constricted month over month, the groups said, with July seeing just 2 percent more imports than June. The contrast is even starker considering that the first half of 2021 saw a total of 12.8 million TEUs processed, up 35.6 percent from the same period last year.

For the full year, U.S. ports tracked by Global Port Tracker are slated to process 25.9 million TEU, up 17.6 percent from 2020, setting a new annual record that tops last year’s 22 million TEU. While the ports have not reported their August numbers yet, Global Port Tracker projected the month would see 2.27 million TEU, up 7.8 percent from the same period the year prior. That would represent the biggest August on record—but it would also fall short of Global Port Tracker’s forecast from a month ago which would see the month break May’s record of 2.33 million TEU.

“Year-over-year growth isn’t as dramatic as it was earlier because we’re now comparing against months when most stores closed by the pandemic last year had reopened and retailers were stocking up again,” NRF vice president for supply chain and customs policy Jonathan Gold said in a statement, noting that the shift was expected.

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However, NRF is also seeing issues stemming from Asian port closures, to ships lined up waiting to get to U.S. docks, Gold pointed out. “That’s creating continuing challenges as retailers work to supply enough inventory to meet demand,” he added. “The administration’s recent appointment of a supply chain task force and a port envoy are major steps forward, and we look forward to working with officials to find solutions.”

“Supply chain logistics management is facing acute problems as disruptions make it difficult for both importers and exporters to transact their business,” Hackett Associates founder Ben Hackett said. “We are facing shortages in all sectors of the chain: a lack of sufficient shipping capacity, which leads to increases in the cost of shipment; lack of warehousing; lack of truck and rail capacity, and a shortage of labor across the board.”

About two dozen ships have been waiting as long as a week or more at anchor to unload their wares at the Ports of Los Angeles and Long Beach, Hackett data shows, and some cargo meant to hit U.S. shores in August may be delayed until later this month. The delays on sailings from Asia, precipitated by Covid outbreaks, could also contribute to shipments arriving later in the season than expected.

The issue will likely be compounded by the pressures of “peak season,” which typically begins in August. Retailers have begun to move up shipments this summer to ensure their holiday inventory arrives on time.

According to the Global Port Tracker, U.S. imports for September are slated to reach 2.21 million, an increase of 5.1 percent year over year, while October could see 2.19 million TEU—the year’s first decline since July of 2020, down 1.3 percent. Analysts expect November to rebound with 2.13 million TEU, a 1.4 percent increase from the year-ago period, and December to see 2.07 million TEU, down 1.8 percent. January 2022 is forecast at 2.15 million TEU, up 4.5 percent from January 2021.

Data from container logistics platform Container xChange, as reported by Hellenic Shipping News, showed that even with the slight year-over-year disparities, the fall season is likely to see a trend of continued pileups at the West Coast Ports ahead of the holidays.

The online platform’s container availability index showed a 60-percent increase to the inbound versus outbound ratio of containers flowing into the Los Angeles and Long Beach ports in August, surpassing pre-pandemic levels. “There is excessive stress on the ports, and therefore indicating further congestion is expected in the coming months as we approach the holiday season in the later part of the year,” Dr. Johannes Schlingmeier, Container xChange co-founder and CEO said.

Calling the congestion a result of the “domino effect” created by higher demand and human and infrastructural resource challenges, Christian Roeloffs, co-founding co-CEO at Container xChange, said that vessel arrivals will continue to be delayed. The situation is likely to lead to higher costs for brands as demurrage and detention charges, increased spot rates and surcharges will accumulate “before it finally settles.”