COVID’s Long-Term Domino Effects on Port Volume

Of all the major cause-and-effect occurrences in world affairs, COVID just may take the prize for the biggest domino effect in history. For one, COVID-19 had a monumental effect on the global supply chain.

To be sure, a record number of container ships off the ports of Los Angeles and Long Beach continue to exacerbate supply chain issues. These ports are experiencing 14 months of record volume in container velocity.

“It used to cost $1,500 to $2,000 to get a 40-foot container from China to the U.S., and door-to-door transit in under two weeks to clear customs. Now prices have sailed past $20,000 per container and wait times at the ports are simply unknown. There are a record-breaking 73 ships sitting off the coast of LA/Long Beach waiting to unload. Before the pandemic, it was odd to have even one ship. Demand is outpacing supply and creating supply chain disruptions,” says Mike Conn, chief development officer at Meridian.

As a result of this domino effect, COVID’s lessons learned are innumerable. The biggest shipping quandary is that Asian markets operate on a 24-7 schedule while the U.S. operates on a weekly schedule of 120 hours, putting it at a real disadvantage when competing in the international shipping community.

“When COVID hit, it was a black swan event, i.e., it had never happened before. This put a real strain on the global supply chain,” says Jon DeCesare, president of WCL Consulting Inc. “COVID woke up Corporate America that supply chains aren’t as strong as they thought. Specifically, harbors have not adopted the 24-7 schedule unlike trucking and air cargo, which puts them at a real disadvantage.”

While the LA and Long Beach ports extended hours on nights and weekends in an effort to ease the congestion, long-term expansion of hours is costly, DeCesare says. And, other shortages, namely container chassis, are adding to backlog issues. Those are built, of course, in China.

“The supply chain is very busy. The American consumers are buying more than ever. Over 60 container vessels are at anchor, terminals are near capacity, containers are out to customers over eight days, which puts a strain on chassis availability, warehouses are challenged, truck driver availability is strained and inland railyards are near capacity. What is needed to solve for this? Increase velocity of containers once they arrive in U.S. Ports and inland railyards. All nodes of the supply chain need to work together to gain efficiencies,” says Michael DiBernardo, deputy executive director, marketing and customer relations, Port of Los Angeles.

Even with increased collaboration, it doesn’t appear this issue will fade anytime soon. DeCesare concurs, saying these long-term problems require long-term solutions into 2022 at least, which has resulted in logistics firms focusing on site locations more than ever before.