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Released May 10, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--The bottleneck of cargo ships at the Port of Los Angeles and the adjoining Port of Long Beach continues, causing headaches for U.S. manufacturers. COVID-19 pandemic-related labor shortages, a boom in e-commerce, a shortage of shipping containers, and the complex nature of international trade all play a role in the situation, according to the National Association of Manufacturers (NAM).
In the organization's April 30, article, "A Bottleneck at California Ports Squeezes Manufacturers," NAM Director of Infrastructure, Innovation and Human Resources Policy Ben Siegrist explained the backlog is costing the U.S. economy billions of dollars and poses a great challenge for manufacturers: ships are waiting in harbor for days before being able to unload, exporters are struggling to move their goods out of the country and some manufacturers are waiting months for parts or goods to arrive.
The traffic jam along the West Coast ports began in late 2020. As of mid-April, there were 23 ships waiting to dock at the two major California ports, according to the Wall Street Journal, down from around 40 in February. Even so, any congestion couldn't come at a worse time for the country's busiest cargo port: the Port of Los Angeles in March processed a 113% increase in container activity year-over-year, or 957,599 twenty-foot equivalent units (TEUs), which led to the most active first quarter in the port's history. The port processed almost 800,000 TEUs in February.
Click on the image at right to view a graph showing the Port of Los Angeles's 2021 container activity, on a year-to-date basis.
The main culprit in the traffic clog is the boom in e-commerce following COVID-19 lockdowns, and economic stimulus packages that increased consumption of goods. But other factors make the issue difficult to fix, Siegrist explained.
A major problem is there are not enough shipping containers for all of those goods. And some shippers are finding it more cost-effective to unload in the U.S. and then send the empty containers back to Asia, which hurts the U.S. manufacturers who want to use those for exports. The Port of Los Angeles notes exports of empty containers in March jumped 219% year-over-year.
NAM points to the importance of strengthening the domestic supply chain for equipment like containers, almost none of which are produced in the U.S., and the trade group is "talking more holistically about supply chains with the Biden administration," according to Siegrist.
Another issue is the complex logistics of international shipping. "The complex relationships between the multiple carriers, port operators and equipment owners are not easy to disentangle or control," he notes. In addition, there are currently only nine ocean carriers, down from more than 20 three decades ago, which supplies manufacturers with fewer competitive shipping options.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
In the organization's April 30, article, "A Bottleneck at California Ports Squeezes Manufacturers," NAM Director of Infrastructure, Innovation and Human Resources Policy Ben Siegrist explained the backlog is costing the U.S. economy billions of dollars and poses a great challenge for manufacturers: ships are waiting in harbor for days before being able to unload, exporters are struggling to move their goods out of the country and some manufacturers are waiting months for parts or goods to arrive.
The traffic jam along the West Coast ports began in late 2020. As of mid-April, there were 23 ships waiting to dock at the two major California ports, according to the Wall Street Journal, down from around 40 in February. Even so, any congestion couldn't come at a worse time for the country's busiest cargo port: the Port of Los Angeles in March processed a 113% increase in container activity year-over-year, or 957,599 twenty-foot equivalent units (TEUs), which led to the most active first quarter in the port's history. The port processed almost 800,000 TEUs in February.
The main culprit in the traffic clog is the boom in e-commerce following COVID-19 lockdowns, and economic stimulus packages that increased consumption of goods. But other factors make the issue difficult to fix, Siegrist explained.
A major problem is there are not enough shipping containers for all of those goods. And some shippers are finding it more cost-effective to unload in the U.S. and then send the empty containers back to Asia, which hurts the U.S. manufacturers who want to use those for exports. The Port of Los Angeles notes exports of empty containers in March jumped 219% year-over-year.
NAM points to the importance of strengthening the domestic supply chain for equipment like containers, almost none of which are produced in the U.S., and the trade group is "talking more holistically about supply chains with the Biden administration," according to Siegrist.
Another issue is the complex logistics of international shipping. "The complex relationships between the multiple carriers, port operators and equipment owners are not easy to disentangle or control," he notes. In addition, there are currently only nine ocean carriers, down from more than 20 three decades ago, which supplies manufacturers with fewer competitive shipping options.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
