Never before has the American consumer needed so much of everything, and needed it so immediately. Partially caused by the shortages at the beginning of the pandemic, and also driven by people working from home and shopping online, consumer behavior has changed drastically over the past year.
News coverage of the massive congestion at U.S. ports has made its way from niche industry publications to mainstream news media. Why? Because supply chains hold the strings to what we eat, drink, wear, live in, and consume. In the past six months, a rapid series of disruptions have created a colossal problem for both B2B and B2C channels, especially at the ports.
Recently, the number of ships waiting at berth to unload between the Port of Los Angeles and the Port of Long Beach reached a staggering 46 vessels in August, and 65 as of September 16. These two California ports account for approximately one-third of all imports into the U.S., so when things get backed up, the ramifications are evident from your local grocery store shelves to the massive Amazon warehouse shelves.
Not only have the bottlenecks created delays, limited options, and caused shortages for the average-Joe consumer, but they also are making prices of goods go higher in ways we have not fully realized yet.
A single container, for example, moving from Shanghai to the United States used to cost (pre-pandemic) about $2,000. Today, the same single container is commanding more than $14,000. Those costs ultimately will trickle down to the end-user.
Travel time for freight between Shanghai and Chicago has gone from 35 days to 73 days. According to one report, the delays at the ports have caused vessel voyage times to be around 30 days longer. Another report cited that transit time from China to the U.S. now takes a total of 100 days to complete.
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It isn't just that there are boatloads of more freight coming into the U.S. (which is one of the biggest issues), but the ships that transport the cargo are much larger than they were only a decade ago. They are, in fact, three times larger. Now called "mega-container ships," these beasts can hold up to 23,000 TEUs. A TEU is a 20-foot equivalent unit, a designation for containers. Bigger ships mean longer loading and unloading times.
PierNext lays out the plus and minus factors that will influence the future of ship sizes in the next few years. According to the article, "... the evolution of container ships is not finished. Based on data from the past, we can predict the dimensions of a potential container ship with a capacity of 30,000 TEUs."
Read the full article here. (Infographic Source: PierNext)
And herein lies the problem for dray carriers. Moving massive amounts of containerized goods from ship to truck to rail, with fewer available trucks (see the latest on the truck driver shortage) and an overtaxed rail and intermodal system, is creating even more delays.
"We have dray carriers who can pick up the freight," says Gwen Roth, senior ports container specialist at Choptank Transport. "The challenge is scheduling pickup times when everything is so congested, and wait times are astronomical. Sometimes the pick-ups are days out, and by then the carrier has moved on to something else. But for all that, we're very fortunate to have strong relationships with a large pool of dray carriers. We know how who to call for what shipment, which has kept us in good stead with our customers."
The situation is only going to get more complex now that we are approaching peak season for the holidays. As shown in the chart below, retailers' inventories are still extremely low. Even if all the freight in transit were magically unloaded and delivered to its destinations tomorrow, the immense backlog still remains. There is no question that the 2022 freight market will continue to be a busy one.
How can Choptank Help? Our team of experienced port and drayage staff can help answer any questions you may have about port and dray moves, as well as provide shippers with up-to-date market conditions at the ports and rails. Choptank's specialty services also include a dedicated team of intermodal experts, so whether you have port freight that needs to go by truck or by rail to its final destination, we can help. Call us today at 800-568-2240 or email firstname.lastname@example.org with any questions.