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Empty shelves and hiking prices while 70 cargo ships float off LA coast – global supply chain chaos
From above they might look like colorful specks in the distance, but the cargo ships floating off the coast of Southern California represent a massive bottleneck for the global supply chain.
On Monday, 97 hulking cargo ships were at Los Angeles and Long Beach ports. At the time, 70 of the container ships were at anchor or in drift areas waiting for space to open up in the port, according to the Marine Exchange of Southern California. The aerial view of the scene captures the magnitude of the situation, as ships wait over a week to dock and unload, turning the coast into a type of parking lot for vessels that can be worth over $100 million and weigh over 200,000 tons.
Earlier this year, Louttit told Insider the sheer size of the ships has only made the issue worse. “Part of the problem is the ships are double or triple the size of the ships we were seeing 10 or 15 years ago,” Louttit told Insider. “They take longer to unload. You need more trucks, more trains, more warehouses to put the cargo.”
A global supply-chain crisis has emptied shelves, creating a cascading effect of shortages and price hikes that have become increasingly difficult to pin to a single item.
At the onset of the pandemic, panic buying of household goods like
toilet paper and disinfectant wipes pushed jarring shortages across the country and prompted price hikes and rationing. While the shortages seemed to abate as 2020 came to a close, 2021 has brought its own shortages. From short supplies of chicken wings, diapers, and toilet paper to homes, furniture, computer chips, and cars, it seems no market has escaped the effects of the global supply-chain crisis.
It’s not just one issue plaguing the supply chain, in what Thompson calls a “hydra of bottlenecks.” Backlogs at the ports have also caused delays at warehouses, on railways, and across the trucking industry.
The amount of time, as well as the amount of money, it takes to ship an item from Asia to its final destination in the US has more than doubled in the past year, and experts are sounding the alarm. Last month, multiple executives told customers to brace for continued shortages and price hikes into 2023.
The supply chain didn’t recover from COVID-19
“At this point, shortages are guaranteed,” Jonathan Gold, vice president of supply chain policy at the National Retail Federation, told Insider. “… We’ve been warning consumers to manage their expectations for the holiday shopping season for months now. The fact of the matter is the supply chain is stretched to its limit from end-to-end.”
Several industry players limited worker levels due to fears of the further spread of COVID-19 within the workplaces. In China, port terminals temporarily shuttered as a result of the country’s COVID-19 zero-tolerance policy, spawning backlogs at some of the world’s largest ports.
“From an economic perspective, it’s sort of like a game of musical chairs,” former US trade negotiator Harry Broadman told Insider, pointing to efforts in the US to compete with 24/7 operations at Asian ports. “The world economy is out of sync because parts of it were forced to go offline when the pandemic started and getting all the industry players back in line at the same time is near impossible.”
Demand grew so rapidly in the past two years that it’s equivalent to about 50 million new Americans joining the economy, Gold told Insider.
“All parts of the supply chain, most of which are built on ‘lean’ principles (no slack, little redundancy, from truck drivers to inventory in warehouses), were not prepared for this increase,” Tony Pelli, Practice Director of Security & Resilience at BSI, told Insider. “While consumer demand can increase in a matter of months, it takes more time to increase port capacity, build warehouses, hire employees, etc., to meet that demand.”
Ports, warehouses, and trucking companies are processing more goods than ever while combatting a series of crushing shortages, including workers, equipment, and space.
Most notably, the national labor shortage has left warehouse companies scrambling for employees and key US ports working with limited manpower.
Two of the largest US ports saw a 30% increase in the amount of goods going through them while processing the cargo with 28% fewer workers. In July, the US Labor Department reported that the warehouse industry had a record 490,000 job openings. Meanwhile, the trucking industry has a shortage of over 80,000 drivers.
With fewer workers to process the goods, shipping yards and warehouses are running out of space, making it increasingly difficult to organize the output of goods to their final destinations.
