What does a congested port look like? And what are it’s implications?
Port congestion creates a variety of complex issues for the supply chain. Over crowding, labor shortages, and increased product demand are just a few of the issues arising from crowded ports. How to solve over crowding will vary from port to port as each has it’s own needs and challenges. The global supply chain is irrevocably connected so every player at every step of the supply chain must seek solutions and communicate those solutions up the supply chain.
1. Unpredictable Weather – Predicting how weather will affect supply chains was already a challenge. This task is made more difficult by the increase of catastrophic and historic weather events that bring global business to a halt. This means that loads can arrive late or not be picked up on time resulting in back ups.
2. Labor Shortages – With a labor market already struggling to keep up with the demand of e-commerce, when truckers do get held up with longer wait times at some ports, they cannot get to their next destination on time. This leads to a truck capacity shortage farther down the supply chain.²
3. E-Commerce – Increased demand for products sold online with faster shipping times, means retailers need more product and stock at the ready for consumers. This has bolstered the need for more space, time, and labor already stretched to capacity.
4. Taxes – Unsure of how the current “tariff wars” will play out, retailers are storing their merchandise meaning increased space is taken up by containers that don’t leave the port on time. ¹ This means there are more containers in use and inefficiently organized creating a back log of labor and time when they need to be moved.
5. Traffic Jams – Crowded ports lead to vessels waiting in line for days to be unloaded. Port managers are struggling to find efficient storage space that can reduce vessel wait times. This means that vessels often do not get to their next destination on time.
6. Container Shortages – Containers waiting to be transported, sitting for longer periods of time at ports means they aren’t returned in time to be used for other loads. Another factor surrounding a container shortage is that less are being produced in part because of new production regulations.³
¹, ² Mongelluzo, Bill. “Port of LA-LB Pledges Congestion Relief.” Study Finds Wide Range in DC Operating Costs, 19 Dec. 2018, www.joc.com/port-news/us-ports/port-los-angeles/port-la-lb-pledges-conge….
Lynch, Karen. “Port Congestion a Growing Concern in International Trade.” American Express, American Express Foreign Exchange Services, Jan. 2016, www.americanexpress.com/us/foreign-exchange/articles/port-congestion-an-….
Cordero, Mario. “Why Fixing Port Congestion Matters.” Study Finds Wide Range in DC Operating Costs, 31 Oct. 2014, www.joc.com/port-news/us-ports/why-fixing-port-congestion-matters_201410….
³ Tirschwell, Peter. “Is There a Container Shortage Brewing?” Study Finds Wide Range in DC Operating Costs, 10 Feb. 2017, www.joc.com/maritime-news/container-lines/there-container-shortage-brewing-market_20170210.html.