Finding container space is not the only problem facing US importers. Once a container arrives at the marine terminal to be off loaded, the shipper can expect a stack of new problems. Port congestion, chassis availability, truck power, and rail capacity are just a few of the issues preventing cargo from moving freely to US distribution centers.
Port congestion has become the norm over the last few years. The number of ships waiting for a berth outside West Coast ports can range between 30-50 ships on any given day. Los Angeles and Long Beach ports, while still heavily congested, are faring far better than the ports of Seattle, Tacoma, and Oakland. In an effort to help relieve port congestion in Southern California, the carriers decided to move more sailings through Seattle, Tacoma, and Oakland. This decision has not worked out well for the carriers. The congestion simply moved away from Southern California to Oakland and the Pacific Northwest. These smaller ports are not equipped to handle the surge in demand the market is presently experiencing. Due to labor issues, ships are taking up to a week to unload further compounding the congestion problem.
Chassis availability is the next hurdle in the supply chain that shippers are facing. The surge in volume has also created a major shortage of chassis. All stakeholders have been asked to help out on this issue. Shippers can do their part by not tying up chassis longer than necessary. On average, it is taking shippers 11 days to return a chassis adding to the shortage.
There is also a truck power shortage. Without qualified drivers, trucking companies have been forced to reduce the number of tractors. Shippers are struggling to find enough qualified truck drivers to meet demand. If their current truckers are unable to handle 100% of the demand, they must look at the spot market for truckers. Similar to the ocean freight, trucking rates on the spot market come with a very steep price tag.
Lastly, the number of containers moving inland via rail have overwhelmed the rail companies. It is not uncommon for a container to sit three weeks waiting for a train moving into the Midwest. Again, the surge in container demand is the main reason for the backlog. The demand for Chicago bound cargo increased 45% in May 2021 versus May 2020. Railroads have been forced to stack containers at their Chicago area facilities waiting for the containers to be picked up. Because there are not sufficient chassis, the stacks of containers waiting to be picked up continue to grow. To make matters worse, shippers are being forced to pay storage charges to the railroad until a chassis becomes available.
How long will the turmoil last? No one knows for certain. Based on projections, US Supply chains will continue to experience major difficulties through the end of 2021. More than likely, the current difficulties will last through the first quarter of 2022. Some supply chain experts are saying this is the new normal. Shippers failing to adapt to this new environment risk further supply chain turmoil.
