Crowded supply chain sees ‘significant progress’, but freight and ships linger ahead of holidays

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Supply chain problems – trapping goods around the world and adding to inflationary pressures as consumers and businesses scramble to find scarce goods – are slowly receding just before Christmas.

In congested west coast shipping hubs that have hosted countless freighters, port officials note that dockworkers and terminal operators have moved nearly 9 million containers, half a million more than what ‘they will have treated during the 12 months of the year 2020.

Buyers are still struggling to find products and businesses are still struggling to meet the growing demand in the COVID-19 era. But at a press conference Thursday, Mario Cordero, executive director of the Port of Long Beach, insisted there were “some signs of improvement” in resolving the vacation backlog.

” From [Thursday] In the morning, 74 container ships are on their way to the port complex in the bay of San Pedro. Off the coast, 28 container ships are waiting at anchor. This is down from 86 just three weeks ago, ”Cordero said.

Cordero said congestion at the twin ports of Long Beach and Los Angeles, which account for 40% of sea freight entering the United States, was a “temporary” situation and was part of the “domino effect” of the coronavirus.

“You will see some normalcy in the supply chain, in my opinion, in the summer of 2022,” added the port official.

“Significant progress”, delays everywhere

Ships are shown off the Port of Long Beach as supply chain issue persists from Long Beach, California, United States, November 22, 2021. REUTERS / Mike Blake

The number of container ships at anchor or strolling within 40 miles of ports has improved thanks to the new queuing system which encourages ships to wait outside a safe and quality zone of the specially designated air (SAQA). This area stretches 150 miles west of the ports and 50 miles north and south.

But other measures have shown that the bottlenecks persist. According to data cited by outlet American Shipper, the actual number of ships waiting outside LA and Long Beach hit an all-time high of 96 in early December, with 56 of them waiting outside the area. 40 miles.

Congestion at California ports is “a bit of a mixed story” with bottlenecks still a problem in the midst of a certain thaw.

“The situation on the ground is improving, but on the water it is not improving yet,” Sanne Manders, COO of Flexport, told Yahoo Finance Live last week. “The front end of the traffic jam starts to roll, where the rear end always recedes.”

Separately, the figures of Southern California Sea Exchange show that there were 113 container ships waiting in the 40 mile zone on Wednesday. And Flexport’s Ocean Turning Speed ​​Indicator (OTI), which measures from the point of production to the destination port, showed journey times hit a record 112 days last week, due longer lead times for ocean going vessels shipped from Asia to Europe.

East transpacific routes from China to the United States have increased to 106 days, based on the time it takes to ship goods to Asian ports, Flexport found.

Meanwhile, there have been massive delays at ports like Savannah, Georgia to Newark, New Jersey – and Britain, the Netherlands and China, with around six hundred freighters worldwide awaiting unloading. at some point last month.

Amid the delays, California port authorities postponed a plan to impose fines on abandoned containers that have become an eyesore to residents.

The “Container Dwell Fee” helped speed containers from terminals through the port complex, but Cordero said officials would monitor the situation and reassess the implementation as early as Monday. Since the announcement in October of the new charge, ports have seen a cumulative 47% drop in the amount of aging cargo on their docks.

“We also remove empty containers from our terminals. Empty containers account for around 36% of all containers at terminals – that’s down from 45% just a few weeks ago, ”Cordero said Thursday. “We are not out of the woods yet, but we are making significant progress. “

The charges follow the Biden administration’s plan to establish 24-hour operations at LA-Long Beach hubs to ease pressure on supply chain bottlenecks, but only one of the seven container terminals at the Port of LA actually met. the goal.

Retailers with ‘influence’ are making their own way

SPRINGVILLE, UT - NOVEMBER 05: A Walmart truck drives away after refueling with other truckers at the Loves Truck stop on November 5, 2021 in Springville, Utah.  A shortage of truck drivers has exacerbated transportation problems, contributing to disruptions in the global market supply chain.  (Photo by George Frey / Getty Images)

SPRINGVILLE, UT – NOVEMBER 05: A Walmart truck drives away after refueling with other truckers at the Loves Truck stop on November 5, 2021 in Springville, Utah. A shortage of truck drivers has exacerbated transportation problems, contributing to disruptions in the global market supply chain. (Photo by George Frey / Getty Images)

Meanwhile, some large retail companies are themselves taking steps to import products from factories overseas into the United States. Several retailers, including Walmart (WMT), The Home Depot (HD), Target (TGT) and Ikea, have mapped freighters to ease the burden on the supply chain themselves.

Large retailers may have “more leverage” compared to “small” importers, Manders of Flexport told Yahoo Finance.

“The reality is also that there is not much you can do. There aren’t all of a sudden armies of truckers coming from anywhere else in the country to help these big retailers, ”he added.

Still, small businesses are hoping this season will provide a much needed boost to business, with plenty of labor shortages, skyrocketing prices and a lack of needed goods.

“Supply chain challenges will be with us for the foreseeable future in a number of industries,” said Clara Shih, CEO of Salesforce Service Cloud, in a statement.

“These challenges have a huge impact on the customer experience, which will only be more pronounced during the holiday season. Every business should anticipate and proactively communicate with customers now, otherwise, they will lose the trust of their customers.” , added Shih.

In another effort to reduce congestion, Long Beach on Thursday announced a new data initiative to ensure transparency of supply chain participants, which aims to launch in February 2022.

Called the “Supply Chain Information Highway,” the project aims to share data among participants “so that goods can be delivered more reliably and efficiently,” said Noel Hacegaba, deputy executive director of the Port of Long Beach, during of a press conference on Thursday.

The crisis has prompted more than half of manufacturers to make significant changes to their supply chains, according to Oden’s 2021 State of Manufacturing report. Industries like the automotive industry have started to relocate or “nearshore”, reducing production to be closer to customers, but even these efforts come with challenges.

“Asia has taken control of all [intellectual property] about how to make products, so it’s not that easy to suddenly say “like, oh yeah, then let’s do it at home,” said Manders of Flexport.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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