U.S. ports continue to be congested! The global supply chain crisis remains unsolved!

It is learned that recently, Spencer Shute, chief consultant of Proxima, a global procurement and supply chain consulting company, conducted an in-depth analysis of the current situation of US ports and pointed out the main problems currently facing ports.

Current status of western and eastern ports

There are two major issues that US ports are facing right now: insufficient capacity (caused by all the backlog of cargo coming into the US) and unsuccessful labor negotiations on the West Coast. These two issues have shippers worried about delivery delays and worker strikes.

As labor negotiations on the West Coast have been delayed, many shippers have chosen to ship their goods to ports on the East Coast and the Gulf Coast, resulting in cargo backlogs at major U.S. ports, especially the Port of Savannah, where the backlog is very serious.

The biggest challenge for ports along the East Coast and Gulf Coast is to improve operational efficiency because they do not have the capacity to handle the huge volumes of cargo that ports on the West Coast can.

West Coast Labor Negotiations and Potential Strike

As labor negotiations remain inconclusive, West Coast ports are facing the risk of a strike. Some shippers are unsure whether to continue to divert cargo to the East Coast and Gulf Coast, or resume shipping to the West Coast as originally planned.

On the other hand, American railways are also facing the risk of strikes. It is reported that in order to protest the implementation of California's AB5 law in the trucking industry, hundreds of truck drivers at the Port of Los Angeles and the Port of Long Beach in California went on strike in July. This has led to many shippers still being hesitant about the transportation of goods at West Coast ports.

Ports lack modernization and automation

U.S. West Coast ports are trying to push for more automation to efficiently move more containers, but ports have been slow to adopt or promote automation technology because dockworkers worry that automated container terminals will eliminate jobs.

Today, nearly all U.S. ports are investing in some type of improvement, and the type of improvement varies depending on the port’s location and specific issues. For example, some ports have capacity issues, while others are older and need more modernization in terms of overall equipment and the way cargo is handled.

Impact of the epidemic in China

It is reported that in 2021, the overall throughput of US ports showed a slight downward trend. The outbreak of the epidemic in Shanghai, China, greatly affected the number of imported containers to the United States. With the end of the epidemic in Shanghai, Chinese factories increased their production capacity and resumed full production and transportation. A large number of ships were shipped from Shanghai to the United States. In the short term, the volume of imported containers in the United States increased dramatically, and the ports were deeply congested.

According to forecasts by the National Retail Federation (NRF) and Hackett Associates, U.S. port throughput will continue to decline in the next two quarters as Americans' consumer demand declines due to rising inflation and the Federal Reserve's interest rate hikes.

All in all, port congestion across the United States is increasing the risk of disruption to the global supply chain, which, coupled with ongoing labor negotiations among port and rail workers, will be further impacted.

Editor ✎ Nicole/

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