port container services

The San Pedro Bay Port’s congestion is clearing up

Port congestion has become something of a fact of life at West Coast ports since the early days of the COVID-19 outbreak back in the Spring of 2020. Clogged shipping channels, labor disputes, and backed-up drayage have become a common plight around the world, even as the most acute and pronounced effects of the epidemic have subsided in most places.

However, as of the past month, much of the congestion has finally cleared at the ports of LA and Long Beach. While this isn’t true in all ports as of now, it speaks to a promising trend in global trade. But the question stands: What caused the LA and Long Beach port congestion in the first place and why are select ports clearing up now?

Why were ports congested in the first place?

The most obvious explanation for LA port congestion is directly related to pandemic lockdowns. Even with essential workers in place, staffing at the ports was reduced until very recently. When widespread uncertainty hit, many job openings went unfilled and social distancing protocols required fewer people to be on-site contributing to the staff shortage and backlog.

Simultaneously, many consumers compensated for a lack of in-person entertainment by turning to eCommerce in record numbers. This transition from buying services to products led to a 20% surge in imports in 2021. Anticipating future shortage concerns, many stores purchased extra stock, leading to an additional increase in freight traffic at a time when both warehouse square footage and middle-mile trucking options were limited. During this time, the port of LA hit a record of over 100 ships waiting for entry. More recently, the port of LA saw a record volume in 2021 surging to 10.6 million TEUs in 2021 which is almost 16% higher than in 2020.

The sharp increase in eCommerce sales led to a number of significant structural challenges, including a shortage of both drivers and chassis at major ports. Leadership implemented new programs and changed practices to compensate, often pushing plans for expansion up by several years to meet demand. For example, the Port of LA and Long Beach, staring down a significant backup of ships at the port, transitioned to 24-hour drayage at ports like LA and Long Beach.

To top things off, the dockworker’s union contract expired in July, and leadership at the port is still working to negotiate a new one.

What has contributed to the port of LA clearing?

Thankfully the backlog of ships has cleared at the San Pedro Bay Port. These factors have contributed to the change:

Inflation — While global inflation has put a strain on household budgets, it has pushed down shipping demand at the ports. Reduced spending has dramatically cut container shipping costs down. Hopefully, the rebalancing of commerce at the port will also lead to a larger systemic reconfiguration that positively reduces inflationary pressure on imports and affects end consumers.

Labor unrest — Ongoing labor negotiations with West Coast Dockworkers are also impacting shippers’ decisions. At present, no strikes have been announced, but there is a long history of strikes causing delays during peak season.

Shipping redirection — A lot of ships from Asia have avoided the Ports in LA in recent months for fear of clogged ports and labor problems. Instead, they’re going to East and Gulf Coast ports, according to Gene Seroka, the executive director of the Port of LA. “That’s likely to continue until a West Coast labor contract is in place,” he says, “and that can’t happen soon enough.” In the near term, this reduction has helped minimize the strain on the port infrastructure and personnel and reduced the costs of using the port for importers and exporters.

Greater efficiency — Drayage practices have changed since the start of the pandemic. Now, cargo ships are triaged as they arrive to avoid crowding the shoreline, which means they move closer as their scheduled offload time arrives to save time overall. As a result, cargo is getting out of the port faster as well.

What can this mean moving forward?

Even though the port is clearing, 2022 is still expected to be the second-highest volume year ever. But as negotiations continue and global trade circumstances improve, there’s hope that the lack of a backlog will allow the ports to handle an increase without significant strain.

An experienced 3PL logistics partner like GlobeCon can help you navigate unanticipated backlogs and cargo snags with advanced technology, portside warehousing, intermodal capacity, and much more.

See the current status of the Port of LA here.

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