A crunch at some ports is having a ripple effect throughout the US supply chain network. Starting at the ports and moving inland, this crunch is coming at a time that is particularly worrisome to retail shippers as the holiday season fast approaches.
The US ports of Los Angeles and Long Beach are particularly affected as a number of issues seem to be a culmination of this problem. Among these issues, the larger container vessels and the shortage of chassis are cited as among the primary culprits.
According to the Chief Commercial Officer for the Port of Long Beach, “Five years ago the average container could carry 8,000 TEU, today at the Port of Long Beach; we see vessels that are 12,000 and 14,000 TEU.” He further noted that ports have been designed to handle much less cargo and thus terminals that have yet to be strengthened to handle this additional tonnage are under strain.
Along with this influx of containers is a shortage of chassis. Port officials are working towards bringing in additional chassis while chassis-leasing companies, DCLI and TRAC Intermodal plan to add 3,000 chassis over the next few weeks. In the meantime, wait times for trucking companies continue to be longer than normal, forcing these companies to impose congestion surcharges while other companies are turning business away.
Meanwhile, rail is slow out of the two ports and this is proving worrisome for the Chicago area according to a recent Journal of Commerce article. An eventual wave of intermodal freight to this transition location and onwards to many distribution centres will test the city’s drayage capacity.
Not surprisingly shippers are concerned with the latest freight crunch. Some shippers are resorting to air freight. 3PLs are also being utilized more, both for their capacity and the value-added services they offer, such as IT systems that provide visibility and tracking capabilities among the transportation modes.
Still, even when this current situation is resolved, congestion spurts will continue as larger vessels become the norm. Instead of frequent visits to ports, these vessels will visit less frequently but with more cargo to dispense. These bursts of tonnage will not only have an effect on the country’s aging infrastructure but also on shippers’ supply chains. As such, all involved in the supply chain will need to make adjustments including ports, rail, trucking, 3PLs and shippers. Could this be an opportunity for air freight to shine? It may indeed be if air freight comes to the rescue this holiday season.
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)