Supply Chain Backlog: The Cargo Ship Pile-Up at Ports

Real Estate News: Real Estate Investing Podcast

Supply chain problems continue as container ships pile up at U.S. ports. The number of ships waiting to offload off the Southern California coast just hit a new record. That’s despite a new 24/7 schedule to get ships unloaded. There’s also a new ‘pop-up container yard’ on the other side of the country to help get things moving.

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A record 111 container ships were sitting outside the ports of Los Angeles and Long Beach on November 10th. According to an Insider blog, that tops a previous record set on October 21st for 108 ships. (1)

Not Enough Dock Workers

Consumer demand has been surging and there’s been an effort to speed things up but there aren’t enough dock workers and truck drivers to unload and deliver all the goods. Insider says the size of the backlog is unprecedented.

Prior to the pandemic, there may have been as many as 17 ships waiting to unload. And now, it’s typical to see more than 100 ships bobbing around offshore, and huge stacks of containers on the docks waiting to be picked up by truckers.

Supply Chain Disruptions Task Force

The White House launched a Supply Chain Disruptions Task Force last June to address the challenges at ports. Task force members met with local government leaders and companies to determine the cause of the bottlenecks and come up with solutions. The Port of Long Beach began the new 24/7 schedule in September. Los Angeles followed in October. According to the White House announcement, it’s possible to move goods at the Port of L.A. 25% faster at night. (2)

Various companies and unions also agreed to expanded work hours. Some of those companies include Target, Walmart, UPS, FedEx, Samsung, and Home Depot. The commitment from those six companies will make it possible to move an additional 3,500 containers per week, through the end of this year.

Shipping Companies Face Big Fines

That hasn’t solved the problem however, and shipping firms now face fines if they don’t get those containers moving more quickly. Insider reports that the two Southern California ports will begin fining companies $100 a day for each container that’s left on the docks for too long. They have three days to move the containers if they are being shipped by rail and nine days to move them if they are going by truck. Those fines are expected to start hitting companies on November 15th.

A global logistics company told Insider: “These containers would move if they could, but it’s a combination of warehouse space, trucking and labor issues.” American Shipper says, at the beginning of November, there were about 60,000 containers at these two ports for more than nine days, and they could all be eligible for fines.

Ports Running Out of Room

The government is also working on another potential solution with the announcement of a “pop-up container yard” at the Port of Savannah on the East Coast. The port will be able to redirect federal funds from a budget surplus to build the port. It will be a couple hundred miles inland from the coast along a rail line. That will give the Georgia Port Authority more space for containers that are waiting to be picked up. (3)

The worst back-ups are in Southern California however. About 40% of the nation’s imports reportedly go through those two ports. But smaller ports, like the one in Georgia, are also dealing with ships that are unloading cargo faster than truckers can take it away.

The newly approved bipartisan infrastructure bill includes several measures to improve port operations. Among those measures are new grants and new grant flexibility, along with the Port Infrastructure Development Program to modernize ports and shipping routes.

The supply chain issues we’ve been facing have impacted all parts of the economy. As you know, the housing industry has been heavily impacted by a shortage of building materials. That’s caused construction delays and higher prices for new homes, as well as material shortages for do-it-yourself homeowners renovating their properties.

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Thanks for listening. I'm Kathy Fettke.

Links:

1 - https://www.businessinsider.com/supply-chain-crisis-record-number-of-container-ships-ca-ports-2021-11

2 - https://www.independent.co.uk/news/world/americas/us-politics/supply-chain-crisis-holiday-shortages-plan-b1954506.html

3 - https://sports.yahoo.com/white-house-announces-pop-container-170539918.html