Congestion and delays at ports on the East and Gulf Coasts have caused significant hardship for businesses, especially small ones. Not only does this hamper smooth operations, but it also increases the cost of shipping goods, thereby contributing to inflation. In this article, we will explore the reasons for the current backlog and discuss efforts to reduce congestion.
Delays and bottlenecks
The roots of the current situation go back to the start of the pandemic, when the movement of goods around the world saw a massive decrease. However, as the world gradually recovered, imports saw a sharp increase which continued over the past two years. The most severe bottlenecks occurred at the ports of Los Angeles and Long Beach in Southern California, where at one point more than 100 container ships were waiting to dock.
While cargo growth has slowed this year at Southern California ports, the volume of goods entering the country via the East and Gulf coasts has increased steadily. Faced with the difficulties encountered in 2021, retailers and manufacturers have adjusted their strategies. They began ordering goods earlier and in larger quantities than usual to avoid delays similar to those seen last year.
Diverting goods to the East and Gulf Coasts
Retailers and manufacturers were concerned about West Coast ports, causing them to divert their goods to the ports of New York, Houston, and Savannah. Additionally, labor negotiations between the union representing dockworkers at West Coast ports further fueled the decision to move goods elsewhere. Historically, these negotiations have been contentious, leading to work slowdowns and significant delays. As a result, the volume of loaded containers arriving at the ports of New York and New Jersey increased by more than 12% compared to the same period last year, while the volume of inbound imports to Houston saw a jump. by 24%.
Impacts of congestion
Congestion at East Coast and Gulf ports affects both businesses that import goods into the country and terminals handling exported goods. The influx of containers has led to a slowdown in loading and unloading processes, causing traffic jams at sea and on land. Truckers, unable to return empty containers, have yards full of containers stacked on trailers. The ports of New York and New Jersey alone have about 200,000 empty containers waiting to be picked up by shipping carriers. Additionally, import boxes in Houston stay for an average of 6-7 days, double the usual length.
Steps to Reduce Congestion
Although the current congestion is the result of overwhelmed ports, authorities are taking steps to improve the situation. Some ports have found additional land inside or outside their premises to store additional containers, creating more space for efficient movement of goods on and off ships. Other officials are considering charging shipping carriers for empty containers that sit at ports for an extended period, similar to practices on the West Coast.
It is important to note, however, that some solutions, such as dredging canals and installing infrastructure, will take years to implement. In the short term, shipping officials anticipate a potential slowdown in freight due to early imports and signs of declining consumer spending. It is hoped that over the coming weeks and months, traffic jams will gradually ease and bottlenecks will ease, albeit to a certain extent.
As we navigate these challenging times, it is essential that businesses stay informed about the situation at ports and adapt their strategies accordingly. By understanding the causes and potential solutions to congestion, businesses can better plan their shipping needs and mitigate the impact of delays on their operations.
