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West Coast Ports Rush To Clear Record Ship Congestion Before “Peak Season” Arrives

West Coast Ports Rush To Clear Record Ship Congestion Before “Peak Season” Arrives

It’s hardly a secret that the recent collapse of trans-pacific supply chains has been among the main reasons for soaring prices, and it’s also hardly a secret that the weakest link in said supply chains are West Coast ports where congestion remains off the charts (as recently discussed in “It’s About To Get Much Worse”: Supply Chains Implode As “Price Doesn’t Even Matter Anymore” and “Port Of LA Volumes Are “Off The Charts“.”) Which is why the first, and most critical step to restoring normalcy in both supply chains – and prices – will come from stabilizing and normalizing shipping congestion and backlog… at some point.

And while nobody knows just when this fateful moment will arrive, today Bloomberg writes that ship congestion outside the busiest U.S. gateway for trade with Asia showed glimmers of easing as port officials race to clear a backlog of arriving cargo before peak season begins in about three months.

There is some good news: while congestion is still clearly present, it’s getting better – a total of 19 container ships were anchored waiting for entry into Los Angeles and Long Beach, California, as of Sunday, compared with 21 a week earlier, according to Bloomberg data. The bottleneck has persisted since November, peaking around 40 vessels in early February when the loading area looked like a parking lot.

But things may get much worse quick as another 18 container carriers are scheduled to arrive over the next three days, with nine of those expected to drop anchor and join the queue.

Meanwhile, benefiting from the modest improvement in backlogs, the average wait for berth space was 6.1 days, compared with 6.6 a week ago, according to the L.A. port. That number had peaked around 8 days in April.

Last week, the Port of Long Beach said last week volume was the strongest-ever for any April, the 10th consecutive monthly high. It was largely due to imports. Exports haven’t fared as well because shipping companies, charging record-high rates to move goods on transpacific routes, would prefer return containers to Asia empty rather than wait for U.S. exporters’ business.

At the neighboring Port of Los Angeles, we noted that the surge in ocean freight containers has pushed the ratio of imports to exports to a record 4.3 to 1, executive director Gene Serokasaid on a webcast last week.

L.A. also had its best April ever and is on track to hit a long-time 12-month volume target of 10 million 20-foot equivalent units of containers in its fiscal year ending June 30, he said.

Seroka signaled confidence the port could reach another goal — having “few if any” ships needing to wait at anchor by June 1, so the port is ready when volume picks up for retailer restocking season in August. “I like our chances right now and I think we’re going to keep chipping away,” he said.

If he is right, it will give the US a much needed reprieve from bottleneck-induced soaring prices. If he is wrong, prepare for even higher prices for any product that has to cross the Pacific before ending up on some Walmart shelf.

Tyler Durden
Tue, 05/18/2021 – 05:45

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