In this Supply Chain Matters commentary we highlight reports of container ship backups growing worse in key ports reflecting increased concerns about whether ongoing seasonal holiday surge inventory can meet expected arrival times.

 

China’s Ningbo-Zhoushan Port

In a Supply Chain Matters News Capsule Follow-Up published last week, we highlighted the temporary shutdown of container terminal operations in the Port of Ningbo in China. A dockworker had tested positive for COVID-19 causing health authorities to seek a shutdown of the Meishan Island terminal for all inbound and outbound container operations. This terminal is estimated to process upwards of 25 percent of the port’s overall container volume.

Today, an update from global supply chain visibility technology provider project44 indicates that no new coronavirus cases have been detected since the single dockworker tested positive for the virus on August 11th. According to the project44 advisory document received by Supply Chain Matters, local port authorities had previously signaled a possible reopening date of September 6th but if a phased reopening begins this week to tackle the backlog, a full resumption of operations may be possible by the beginning of September.

Of growing concern is the large number of container vessels now at anchor awaiting the availability of berth space.  According to the visual graphic from project44, 41 container ships are anchored in the waters outside the port.

Data further indicates that the average number of weekly port calls to Ningbo had dropped by 22 percent last week. However, unlike the recent Port of Yantian closure in May, blank sailings are not spiking since carriers have managed to successfully divert cargo to other terminals thus far.

 

U.S. West Coast Ports

American Shipper reported yesterday that container ships forced to anchor off the coast adjacent to major southern California ports is about to set a new record.  According to this report, on Saturday, August 14, there were a total of 66 container ships either at berth or at anchor in the Los Angeles/Long Beach port area. That total number was one shy of the record of 67 ships set of January 28 of this year, when U.S. exporters were unable to move their cargo because multiple shipping lines refused to haul them in order to recover their sailing schedules.

 

Major U.S. East Coast Ports

Likewise, the American Shipper report indicates that the Port of Savannah, Georgia, on the U.S. East Coast is experiencing building congestion. As of yesterday, ship-positioning data indicated that 17 ships are at anchor outside Tybee Island. Cited is an advisory issued by carrier Hapag-Lloyd indicating delays of 4-5 days should be expected as ships await berth assignments with an additional indication that the situation is not going to improve for the foreseeable future. One of the compounding challenges is a shortage of container chassis, trucks and warehouse space across port areas.

Positioning data further indicates that 9 ships are at anchor awaiting the availability of berths in the Ports of New York and New Jersey.

 

Supply Chain Matters Perspectives

As many in the global transportation and logistics community are all too aware, mid-August being the start of the peak shipping season does not bode well for these ongoing and cascading disruptions at key shipping and receiving ports.

Entire global container shipment movements became disrupted by the over one-week grounding of one of the largest container ships, the Ever Given, in late March of this year. The global ocean transportation network has since been impacted by other disruptions along with severe weather and COVID-19 related events.

Manufacturers and retailers along with logistics services providers have attempted to mitigate the ongoing congestion by either accelerating the timing of holiday inventory purchases, by chartering additional container vessel movements or by seeking alternative shipping modes such as inter-continental rail, inter-modal or air freight services.

All of this activity has led to exploding freight rates, new and unexpected carrier surcharges along with added accessorial costs. Transportation budgets have long since been exceeded and added costs are likely to result in more increased pricing for end goods.

At the same time, each disruption adds to additional challenges in securing containers, truck chassis to move containers or ongoing inter-modal rail congestion servicing major port areas.

The next two months are going to be critical for timing in that inventory must be able to move into wholesale, retail and online retail distribution channels before November when traditional holiday promotions commence. Right now, the overall situation does not look promising for planning milestones.

Once again, the global supply chain community which was praised for herculean efforts of last year overcoming the restrictions of a global wide pandemic are at risk of becoming the scapegoats of 2021 in terms of timely product and services availability

The ultimate determinate is now a work-in progress.

 

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