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Port Congestion Side-effects

If 2020 was a problematic year for the logistics and transportation industry, 2021 is the bigger and more complicated sequel.

Previous congestion records have been surpassed in time and the number of boats at anchor. This year, in the port of Los Angeles – Long Beach, there have been between 28 and 37 vessels waiting to be unloaded at any given moment for up to 8 days.

In Mexico and Latin America’s leading ports, the story looks the same; in Panama’s Balboa port, delays of up to 14 days have been reported. After the Suez Canal blockade, all of Europe was affected on the other side of the Atlantic, leading to secondary effects worldwide. Experts say that even as normal flow returns to the canal, the consequences will linger.

Except for what happened in the Suez Canal, the reasons behind the situation are numerous yet similar from port to port. On the one hand is the fact that, due to social confinement, e-commerce has increased considerably. A limited labor force compounds this high demand. In the first week of February alone, 1,000 California port workers tested positive for COVID-19. Until all workers are vaccinated, it is impossible to work at the same pace as in 2019.

Some countries have fast vaccination programs; others expect to finish that process by 2022 or 2023 in the worst-case scenario. Be that as it may, fewer workers working more ships is an unfortunate formula for the economy. Ports optimized for 10 to 20 vessels today handle up to 30 with less personnel. Delays resulting from this situation reduce the availability of highly demanded products, increasing their market price. Likewise, the idle time of a vessel on standby only increases operating costs.

According to Drewry’s consulting firm, increases in inflation and product shortages are mainly due to the e-commerce boom, congestion in supply chains and ports, and shipment cancellations. Bottlenecks have been intense; the market demands exist, but it has been very complicated to get them to consumers, given the circumstances.

International trade will not stop to resolve the situation; the economy has to keep going. Some solutions have been to reduce the number of stops and modify a ship’s destination to ports with greater availability, but this does not solve the loss of efficiency entirely.

The industry is currently hard at work on long-term solutions to improve infrastructure and modify the supply chain. This is to solve the efficiency and capacity issues that are presently happening. While these solutions are put in place, patience is needed, and it is necessary to wait for the vaccination schemes to be successful so that more workers can return to the ports. The outlook will improve; it just takes time.

For more news, articles, and blogs on all things related to logistics, transportation, and customs issues, stay tuned to our website and social media. At Woodward, we have more than 80 years working in national and international logistics, always at the forefront of new technologies and industry trends.