The largest port in the U.S. faces a near-record backlog of cargo ships, and there's no end in sight.
Los Angeles and Long Beach ports had 62 cargo ships waiting to dock and unload as of Friday — a stark contrast to an average of one to zero ships before the pandemic. Today, ships at the port can wait for as long as three weeks, Port LA data shows.
Despite the historic backup, the ports are only operating at 60% to 70% capacity, Uffe Ostergaard, president of the North America region for German ship operator Hapag Lloyd told The Wall Street Journal.
"That's a huge operational disadvantage," Ostergaard said, pointing to the fact that the two ports are closed for several hours most days, as well as on Sundays — making it more difficult to keep pace with the ports in Asia and Europe that are sending the goods on a 24/7 schedule.
ast week, the Port of Long Beach moved to increase their hours of operation to 24-hours on Monday through Thursday. The Port of Los Angeles did not follow suit, choosing instead to maintain its existing hours.
The traditional routine at the ports includes two shifts for longshore workers: 8 a. to 4 pm and 6 pm to 3 am. The ports are closed on Sundays. Overnight shifts and Saturdays are more expensive and rarely used, The Journal reported.
Longer hours may not be enough.
Gene Seroka, executive director of Port Los Angeles, said longer hours do little to address the backlog when truckers and warehouse operators have not similarly extended their hours. It's not optimal for truckers to pick up loads at night, especially when they'd have to find alternative places to store the goods when the warehouses are not open at night.
What's more, many warehouses near the West Coast don't have space for the goods. About 98% of warehouses in Southern California's logistics-heavy Inland Empire region are fully occupied, while the entire Western U.S. has a 3.6% vacancy rate, according to The Journal.
"It has been nearly impossible to get everyone on the same page towards 24/7 operations," Seroka said.
Shortages of workers and equipment exacerbate delays
A struggle to hire enough workers has had a tremendous impact on the transportation industry nationwide, causing headaches at ports, warehouses, railways, and trucking. Many companies have fewer workers than before the pandemic but face significantly more work due to the boom in demand for goods since the pandemic started.
The shipping delays have made it more difficult for truckers to meet their deadlines and stay on schedule when it comes to picking up goods at ports.
The backlog has also caused a shortage of containers and the chassis needed to haul them. Containers wait for extended periods in ports, and it takes about twice as much time for operators to return the chassis, the Journal said.
Some cargo companies have even taken to storing their goods in the containers due to the lack of space at warehouses — as shipping containers represent a cheaper option than renting storage space. Last week, Flexport said shipments between Asia and North America were facing "critical undercapacity" when it came to available equipment.
The U.S. is not the only country struggling to keep up with a build-up of cargo ships. On Sunday, Bloomberg reported that COVID-19 shutdowns had created a ripple effect, pushing the prices of goods across the globe higher.
The supply chain snarls are expected to create major issues for holiday shoppers. Executives have warned the shipping crisis will continue into 2023.
Credit Baz Ratner/Reuters