Record Amounts of Cargo Lead to Delays in the Atlantic and Gulf of Mexico
Backlogs of dozens of ships have reached the East and Gulf Ports. Shippers looking to divert their cargo from the highly publicized congestion in Southern California are finding similar supply chain bottlenecks in the eastern ports of New York, Savannah, and Houston. Manufacturers, carriers, retail and more are still discovering the residual effects of the past two years on the global supply chain.
The peak shipping season, coinciding with the upcoming holiday season is expected to bring challenges. However, experts forecast a slowdown soon after.
Retailers Preparing for Holiday Season
Retailers faced many difficulties over the previous two years. Managing inventory was one of the largest. In an effort to avoid empty shelves that ate into profits, orders for physical goods have been placed earlier than usual and in larger quantities. These dual factors have led to the traditional peak season of shipping to shift slightly forward into the summer months.
Increased orders have also contributed to the record amount of cargo passing through domestic gateways. The Port of Savannah is seeing its busiest year ever. Savannah’s TEU volume year-to-date is already 7% above last year’s numbers—the previous record holder for busiest year. Savannah is accelerating construction on infrastructure projects and hopes to add nearly 2.5 million TEU of berth capacity by 2024. Unfortunately, this is of little immediate consequence to the 40 ships waiting off the coast of Georgia.
Shipments Diverted to East and Gulf Ports
A major reason for the extra cargo in eastern ports is related to the backlogs in Southern California. Last year, everything from Covid-19 regulations to trucker protests to energy crunches in Europe resulted in hundreds of ships just off the coast at the same time, waiting to enter the Ports of Los Angeles and Long Beach. Not only did this wreak havoc on shipping deadlines, fines were issued for containers that sat at the terminal for too long.
Additionally, freight forwarders have been keeping a close eye on the labor negotiations between the ports and the dockworkers union. President Biden stepped in when they failed to reach an agreement in July and postponed a potential strike until at least September. A federal arbitrator was appointed, but there is still a possibility of a union strike that would shut down west coast ports.
Hoping to avoid these issues, freight forwarders diverted shipments destined for the United States to East and Gulf Ports. Unfortunately, carriers are still faced with backlogs at the new ports. New York and New Jersey currently have over 200,000 empty containers sitting at their terminals. Apart from taking up space for new arrivals, the tight space also slows down the speed at which ships can be loaded and unloaded. Fines similar to those already in place in Southern California could be enacted elsewhere.
Bottleneck Solutions on the Horizon
The silver lining is the bottlenecks are not resultant of a failure at the ports themselves. There has not been a break in the last two years, which have seen record numbers across the industry. Ports are overwhelmed with cargo and simply do not have enough space. Some locations, such as Savannah, are finding extra land adjacent to or near the port as a temporary stopgap while they improve their infrastructure. Projects to dredge more land and build more cranes are ongoing.
Lastly, it is possible we have already seen the peak of shipping this calendar year. With the holidays fast approaching, retailers have already placed their orders. Hints of this potential slow down have been seen in Southern California. Ports are extending their hours to prevent a further increase in backlogs and are receiving positive feedback from all involved.
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