NEW YORK (AP) – A trade bottleneck resulting from the COVID-19 outbreak has left US companies anxiously awaiting goods from Asia – while dozens of container ships anchored off the coast of California, unable to unload their cargo .
The pandemic has wreaked havoc on the supply chain since early 2020, when factories across China had to be shut down. The seeds of today’s troubles were sown last March, when Americans stayed at home and drastically changed their buying habits – instead of clothing, they bought electronics, fitness equipment, and home improvement products. US companies responded by flooding the reopened Asian factories with orders, sparking a chain reaction of congestion and snags at ports and freight hubs across the country as the goods began to arrive.
Main Street businesses now have to wait months instead of the usual weeks for a delivery from China, and no one knows when the situation will be resolved. Owners explain a lot to customers, order more inventory than usual, and lower their expectations for when their shipments arrive.
Alejandro Bras used to be able to place an order with factories in China and expected to receive his products within 30 days. Now that there are problems throughout the supply chain, “we’re adding an extra two months,” he says. And those two months are “iffy” – it could take even longer.
Bras’s company, Womple Studios, sells monthly subscription boxes of educational crafts and activities for kids; many of the products are tailor-made so that he cannot easily find replacements.
Bras found himself spending more time on logistics than product development, and more time apologizing to the Oakland, California company’s customers who expect a shipment every month. Customers have got it – they realize that the pandemic has disrupted shipping and trade worldwide.
The cluster of offshore ships is perhaps the most dramatic symptom of an overwhelmed supply chain. As production in Asia increased, more ships arrived in ports in Los Angeles, Long Beach and other West Coast cities in the fall than the gateways could handle. Ships with as many as 14,000 containers have been offshore, some of which have been around for more than a week. Sometimes as many as 40 ships have been waiting; there are normally no more than a handful, according to the Marine Exchange of Southern California, a service that monitors port traffic and operations.
“With this kind of backlog it takes a few weeks to work through. It’s not going away. And right now, new ships are sailing to the US, ”said Shanton Wilcox, a production consultant at PA Consulting.
But there are also bottlenecks on land. It may take 8,000 trucks to get the cargo off a ship, said Kip Louttit, executive director of the Marine Exchange of Southern California. But when all those trucks hit the road, not enough is available as dockers try to unload the next ships in port. Rail freight has also been affected.
“If you have more cargo, you have a less efficient cargo movement system,” says Louttit. The pandemic itself is also slowing the flow of goods, sidelining workers in port warehouses, he says.
Put all the problems together, and when a ship enters port, it takes five to seven days to unload instead of two to three, says Shruti Gupta, an industrial analyst at RSM consultancy. “That in turn has consequences for truck drivers and rail services, because they have to wait until the port is clear,” she says.
Businesses are also waiting due to the high demand for space on ships and in the shipping containers that range from 20 to 45 feet in length.
“Normally a shipment can be booked with a few days’ notice and currently you need to book containers 30 days in advance,” said Peter Mann, CEO of Oransi, an air purifier and filter manufacturer based in Raleigh, North Carolina. In his operational plans, he must take into account twice as long shipping times as normal.
When Mann started having problems bringing in shipments in the fall, he decided to place larger orders – manufacturing the goods was no problem and fewer deliveries meant less waiting. It meant that more money had to be invested in inventory.
Supply disruptions can be a more serious problem for smaller companies because, unlike larger players, they may not be able to shift production to other countries – for example, countries in the Western Hemisphere whose products can be shipped to East Coast ports. And big 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 could be as much as five times the normal price,” said Craig Wolfe, whose company CelebriDucks has had problems getting rubber ducks from China since the start of the pandemic.
One of Wolfe’s shipments was on the dock for three weeks because no rail cars were available. Another that he expected to ship in mid-February has still not left China.
“It would have arrived by now,” said Wolfe, whose company is based in Kelseyville, California. He’s worried because most of his products aren’t typical rubber duckies – they’re based on presidents and other celebrities and pop culture trends like the Harry Potter books and movies. Like Mann, he has placed a number of orders that are larger than usual to make sure he has enough stock.
Exporters are also feeling the impact of the bottlenecks. When containers are unloaded in ports, many containers are returned to Asia empty instead of being held and filled with US goods.
Isaiah Industries sells its metal roofs to Japan, “but we have huge delays in shipping containers to them. So we’re here with orders and products to fulfill those orders, but no way to get them shipped, ”said Todd Miller, president of the Piqua, Ohio company.
Miller is also waiting for shipments of raw materials from abroad, including foil commonly known as tar paper to be placed under roof tiles. His problem is that he competes with every other importer for space on container ships.
“We can have it produced, but it will take four to six weeks for them to load it onto a ship,” he says.