supply bottlenecks ports

Why Record Traffic Jams Are Forming Outside Ports

Around the world, ports are congested and ships delayed. And just before Christmas, of all times, the situation is getting worse. Satellite images show that billions of dollars worth of gifts are stuck in a traffic jam. And it won’t and won’t go away.

“Economy from above” is a collaboration between WirtschaftsWoche and LiveEO. This is a translation of the original article written in German by “Jacqueline Goebel“. Access the original article here.

On Wednesday, there were still 99 ships waiting outside the ports of Los Angeles and Long Beach. On Thursday, there were 96 freighters. An improvement, albeit a minimal one. The situation off the two most important ports in the U.S. is so tense that the authorities now give daily updates.

The situation is serious, because it’s about the most important shopping season in the USA. Thanksgiving, Black Friday and Cyber Monday are just around the corner, followed by Christmas. At no other time of year do people shop so much, order so much online.

But some of the gifts probably won’t make it to store shelves in time. The products are stuck at sea. The investment bank Goldman Sachs estimates that ships carrying $24 billion worth of goods are stuck in traffic off Los Angeles and Long Beach alone. LiveEO’s exclusive satellite images also give an impression of the situation.

ports of los angelesports of los angeles
Los Angeles, USA
15.10.2020 (left image): The ports of Los Angeles and neighboring Long Beach have long been considered a bottleneck for goods traffic to the U.S. West Coast.
15.10.2021 (right photo): But a situation like the one in October 2021 has never been experienced there either. Around a hundred ships are jammed off the coast.

For more than a year now, shipping has been struggling with congestion and blockages in ports around the world. And now the situation is coming to a head once again. Never have so many container ships been stuck in traffic: according to data from the analysis firm Clarkson, 37.3 percent of the world’s container fleet capacity is anchored or waiting in ports. Before the corona pandemic, it was considered a scandal if this figure ever exceeded the 30 percent mark. Not only off the U.S. West Coast, but also in the waters off Shanghai or Shenzhen, the container ships are jammed; even off Rotterdam, things are not moving as fast as usual.

The situation resembles a game of patience in which there can be no winners. The workers in the ports can hardly empty a ship before the next ones are already jostling for entry. There is a general lack of personnel, including truck drivers, to somehow get all the goods from the coast into the country. The biggest problem, however, is the unrelenting demand that puts pressure on the entire system. It traditionally reaches peak levels before the holidays. The factories in Asia are therefore producing like crazy for the store shelves in America and Europe. But not nearly as many goods have to be shipped from the West back to the East. As a result, empty containers pile up in the ports, blocking the way for the new, full boxes. At the same time, the empty boxes are missing in Asia.

“When a system is under stress, all it takes is one small glitch to cause problems across the network,” says Chris Rogers, an economist at Flexport, a digital freight forwarder that organizes and monitors shipments around the globe. “Then a problem in one port leads to domino effects around the world.” Because ships aren’t leaving on time in Los Angeles, they’re also delayed in Seattle. Ships are already jammed there, too, so some shipping companies are currently skipping the port.

Rogers compares the situation to the chaos that reigns in an apartment during a move: Once the apartment is full of boxes, it becomes difficult to find exactly the one in which the cups and plates are hiding. Maybe you have to lift up other boxes to even get to the one you need. They then get in the way when you want to move the plate box. “As soon as a port hits its capacity limits, efficiency drops immediately,” Rogers says.

rotterdam netherlandsrotterdam netherlands
Rotterdam, Netherlands
21.09.2019 (left photo): The port on the coast of Rotterdam is the largest in Europe. But freighters don’t actually have to wait long here.
22.09.2021 (right image): The delays around the world are also making business difficult in Rotterdam. In the meantime, both container ships and tankers are waiting here to finally be able to enter the port.

This is evident in Rotterdam, for example, as can be seen in the satellite images. The port is an important port of call both for container ships and for tankers that deliver crude oil to the refineries there, for example. Off the coast, both tankers and cargo ships were now recently waiting to be handled. Hamburg has also had some problems this year, especially after the blockade of the Suez Canal. Because first, no ships arrived and then all at once, the port had to struggle for weeks to transport all the containers. In some cases, it was unable to handle barges for days. But compared to the USA or China, the situation in Europe is still harmless, says Rogers.

Rotterdam Netherlandsrotterdam netherlands
Rotterdam, Netherlands
21.09.2019 (left image): Normally, ships do not have to wait long in Rotterdam before entering the port.
22.09.2021 (right picture): But this year everything is different. But at least the situation is not as bad as in China and the USA.

In addition to unpunctual ships, Chinese ports are also struggling with bad weather conditions and strict measures against the spread of the coronavirus. Chinese authorities had repeatedly sealed off ports over the past year. Because there were corona cases, they first closed the port of Yantian in July, then the port of Ningbo outside Shanghai in August. At the beginning of October, a typhoon also passed over the Chinese coast and stopped operations in the ports for a few days.

port of ningboningbo port
Ningbo, China
03.10.2019 (left image): Blue water, clear sailing: last year, the port of Ningbo had no major problems.
02.10.2021 (right picture): But this year, ships are also moored in front of the port of Ningbo, waiting to enter.

In the USA, port congestion is now at the top of US President Joe Biden’s list of priorities. Just a few days ago, the president declared that the ports of Los Angeles and Long Beach, logistics companies such as FedEx and UPS, and also retailers such as Target and Walmart should now operate 24 hours a day, seven days a week.

The city of Long Beach is now allowing up to four containers to be stacked on top of each other outside the port instead of two. At the very least, that should create more space. “Even that’s not a magic wand that solves all the problems,” says Chris Rogers of Flexport. “You can’t just lift containers and stack them; you need equipment to do that, too.” And to operate 24 hours a day, you first need enough staff for a third shift.

The chances are therefore slim that the traffic jams will ease before the end of the year. There is some hope of recovery in February, with the Chinese New Year. During the holidays, factories and ports in China come to a standstill, which usually has the effect of a new start for shipping. But even last year, this was not enough to get shipping back on track. The reason: high demand didn’t allow shipowners to take a break at all. “If demand doesn’t normalize by spring 2022, if we don’t see a significant drop,” Rogers says as a result, “then the situation could drag on into the year after next.”

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