Unless you’ve had your head in the sand for the past few months, you know about the huge (and we mean HUGE) problem with ships backed up in the Pacific Ocean off the coast of California. It’s been in the news for most of the summer as the industry deals with closures associated with COVID-19 regulations, as well as very healthy consumer spending. Could this situation mean a supply chain crisis is imminent? In this month’s shipping update, we dive in to find out.
The Situation: Backups Continue at Ports Around the Globe
At the end of September, a record 66 cargo ships were floating in the water for clearance to dock at ports along the western coast of the US. Their average wait time to land and unload is currently at six days, a big increase from the normal average of two days—but some are saying the wait may extend to as long as four weeks.
On top of that, the West Coast is now dealing with a massive oil spill, the cause of which is currently being attributed to the glut of cargo ships waiting for a place to land. The suggestion is that an anchor from a ship may have struck the pipeline connected to an offshore facility owned by a unit of Amplify Energy Corp. What started as congestion escalated to a potential supply chain crisis and has now morphed into an environmental catastrophe.
Projection: The Supply Chain Crisis May Last Years
With predictions that the port-congestion situation will continue through the end of the year, retailers are planning their holiday advertising campaigns starting in October for fear that they will not be able to have items in stock for last-minute holiday shopping. And with Deloitte estimating a 7–9% increase in consumer spending this year, the media is warning that Christmas may be cancelled due to the supply chain crisis.
Unfortunately, shipping woes may not end with a calendar turn into 2022. In fact, the CEO of one of the world’s largest logistic companies, DP World, suggests that these bottlenecks may well continue into 2023. He also projects that this will result in higher shipping costs as the industry struggles to deal with closures due to COVID-19 regulations as well as an increase in consumer spending.
Social distancing and mandatory quarantining are still present at the majority of ports around the globe, which are contributing to the delays.
While many global ports are facing delays and backups, which in turn lead to significant issues contributing to a potential supply chain crisis, there is a glimmer of hope. On the East Coast, for example, just two ships are waiting to dock at New York or New Jersey. The goal, as an international freight forwarder, is to assess what’s coming up and find alternate routes to get through the logjam.
That’s what we do at Cyclone Shipping. As your partner in international shipping, we help you navigate this or any potential supply chain crisis. We are in constant communication with shipping and logistics companies to create the best possible outcome. Although we do not have a crystal ball to foresee the future, we are always looking several steps ahead to ensure we have multiple plans to get your shipments from point A to point B.
Contact us to develop your strategy and keep your shipments moving in the right direction.