SAN FRANCISCO (CBS SF / AP) – Commuters crossing the Bay Bridge recently noticed a large number of freighters parked on San Francisco Bay awaiting an opening in the Port of Oakland.
The scene was repeated in Long Beach. Due to the trade bottleneck caused by the COVID-19 outbreak, US companies are eagerly awaiting goods from Asia. Dozens of container ships are anchored off the California coast and cannot unload their cargo.
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The pandemic has ravaged the supply chain since early 2020 when it forced factories to close across China.
The cornerstone of the current problems was laid last March when Americans stayed home and changed their shopping habits dramatically – instead of clothes, they bought electronics, fitness equipment, and home improvement products. US companies responded by flooding reopened Asian factories with orders, creating a chain reaction of traffic jams and trips in ports and freight hubs across the country as the goods arrived.
Companies on Main Street now have to wait months instead of the usual weeks for a shipment from China, and no one knows when the situation will be resolved. Owners explain a lot to customers, ordering more inventory than usual and lowering their expectations of when their shipments will arrive.
Alejandro Bras used to be able to order factories in China and expected to receive its products in 30 days. Now, with problems all along the supply chain, “let’s add another two months,” he says. And those two months are “doubtful” – it could be even longer.
Bras’s company, Womple Studios, sells monthly subscription boxes of educational crafts and activities for children. Many of the products are bespoke so he cannot easily find replacements.
Bras spent more time on logistics than product development and apologized more to the company’s customers in Oakland, who expect deliveries every month. Customers understand – they recognize that the pandemic has disrupted shipping and trade worldwide.
The cluster of ships off the coast is perhaps the most dramatic symptom of an overwhelmed supply chain. As production increased in Asia, more ships arrived in ports in Los Angeles, Long Beach, Oakland, and other west coast cities in the fall than the gateways could handle.
Ships with up to 14,000 containers have been sitting off the coast, some of them for over a week. At times up to 40 ships were waiting. Usually, according to the Marine Exchange of Southern California, there are no more than a handful, a service that oversees port traffic and operations.
“With this type of backlog, it will take several weeks to get that done. It will not go away. And new ships are sailing into the US right now, ”says Shanton Wilcox, manufacturing consultant at PA Consulting.
But there are also throttling points on land. According to Kip Louttit, executive director of the Marine Exchange in Southern California, it could take 8,000 trucks to remove cargo from a ship. But when all these trucks hit the road, there won’t be enough available when dock workers try to unload the next few ships in port. Freight traffic is also affected.
“When you have more cargo, you have a less efficient cargo moving system,” says Louttit. The pandemic itself is also slowing the flow of goods and incapacitating workers in warehouses in the ports, he says.
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Put all the problems together, and when a ship pulls into port it takes five to seven days to unload instead of two to three, says Shruti Gupta, an industry analyst at consulting firm RSM. “That in turn has consequences for truckers and rail traffic, because they have to wait until the port is free,” she says.
Companies are also waiting because of the high demand for space on ships and in the shipping containers that are between 20 and 45 feet long.
“Usually a program can be booked with a few days’ notice. Currently, containers have to be booked 30 days in advance, ”said Peter Mann, CEO of Oransi, an air purifier and filter manufacturer based in Raleigh, North Carolina. He has to consider the shipping times in his operating plans twice as long as normal.
When Mann was having trouble getting deliveries in the fall, he decided to place larger orders – the goods were not a problem making and fewer deliveries meant fewer waiting times. It meant investing more money in inventory.
Disruptions in supply can be a more serious problem for smaller companies as, unlike larger companies, they may not be able to relocate production to other countries – such as countries in the Western Hemisphere, whose products can be shipped from ports on the east coast. And large companies can better afford to use air freight, which is more expensive than shipping.
Because there is so much competition for containers, import costs are increasing.
“The price can be up to five times higher than usual,” says Craig Wolfe, whose company CelebriDucks has had problems getting rubber ducks from China since the pandemic began.
A shipment from Wolfe was on the dock for three weeks because no railcars were available. Another, which he is expected to deliver in mid-February, has not yet left China.
“It would have arrived by now,” says Wolfe, whose company is based in Kelseyville. He’s concerned because most of his products aren’t your typical rubber ducks – they’re based on presidents and other celebrities and pop culture trends like the Harry Potter books and films. Like Mann, he has placed some larger than usual orders to make sure he has enough inventory.
Exporters are also feeling the effects of the bottlenecks. When containers are unloaded in ports, many are sent back empty to Asia instead of being held there and filled with US goods.
Isaiah Industries sells its metal roofs to Japan. “However, we have major delays in delivering containers. So we’re sitting here with orders and products to fill those orders, but there’s no way to ship them, ”said Todd Miller, president of the Piqua, Ohio company.
Miller is also awaiting shipments of raw materials from overseas, including foil, commonly known as tar paper, that will be placed under roof tiles. His problem is that he competes with every other importer for space on container ships.
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“We can have it produced, but it will be four to six weeks before they can load it onto a ship,” he says.