Shipping Delays Expected to Extend 'Into Spring and Summer' (and America's $1,400 Stimulus Checks Could Make Slowdowns Worse)
When last we checked in with the ports of Los Angeles and Long Beach, which together make up the San Pedro Bay Port Complex, the backlog of container ships waiting to unload had reached historic highs due to an unrelenting surge in cargo volume and dockworkers sidelined by COVID.
That situation has reportedly eased, with the bottleneck decreasing from over 40 ships to around 20. According to the Wall Street Journal, Eugene Seroka, executive director for the Port of Los Angeles, said the average time to dock was now about a week, down from two weeks during the ports' January peak.
But that relief will be temporary.
Part of the reason delays have improved is that smaller West Coast ports, like Oakland, have picked up some of the incoming volume. But those ports are now reaching max capacity, too. San Pedro Bay Port Complex remains at 90% container storage capacity, with 80% considered "full," per Seroka, while shortages of truck drivers and warehouse space continue hampering efforts to clear cargo.
Seroka said volume is about to surge again over the next few weeks, continuing "into the spring and summer." And analysts are worried that the $1,400 checks issued as part of the Biden administration's $1.9 trillion stimulus package will make delays worse.
Record e-commerce sales during the pandemic have been a driving force behind shipping delays we've seen thus far, as Americans turn to online shopping in place of dining out, going to the movies or shopping in physical stores. With much of America's goods coming from China, West Coast ports have had difficulties handling the nonstop surge in volume.
Cargo update (Month 23, 2021): All Port of Los Angeles terminals are open and operational, with 23 vessels in port today. Labor crews working on 17 container ships, two tankers, two dry bulk carriers, one auto carrier and one refrigerated cargo vessel. https://t.co/ig2Qixagc9 pic.twitter.com/bqpM9738Ie
— Port of Los Angeles (@PortofLA) March 23, 2021
The most recent stimulus package paid out something in the neighborhood of $126 billion to U.S. consumers. If Americans continue shopping online—a likelihood with pandemic restrictions still not fully lifted and vaccinated individuals only slowly beginning to resume "normal" activities—the ports won't catch a break any time soon.
“The big question is, will the Americans spend their new stimulus checks?" said Lars Jensen, chief executive of Copenhagen-based SeaIntelligence Consulting, according to WSJ. "If they continue buying stuff instead of traveling or going out to restaurants, then the bottlenecks can get worse."
Compounding the issue is a shortage of shipping containers. According to Bloomberg, container sales were actually down entering 2020, leading manufacturers to scale back production. When shipping volume exploded after the start of the pandemic, container manufacturers increased production. But they haven't been able to keep up.
Analysts expect this to normalize in the back half of 2021. Until then, container space will remain limited and freight prices will remain high. These factors, along with other issues up and down the supply chain, will continue impacting promo businesses.
“We are advised to add an additional 14 days minimum into ocean supply chain forecasts,” Dan Taylor, president and owner of BamBams, told us earlier this year. “Distributors need to be aware when planning for their larger import orders this year. It will likely be the end of 2021 for things to return to normal.”
That advice remains as relevant as ever as we move further into 2021.