Holiday Season Peak Shipping Rush

In the world of international shipping and logistics, there are certain events that drive cyclical demand in the market, and perhaps none of them is larger than the holiday season. This annual tradition drives a huge swell in retail demand every year. While consumers may put off their holiday shopping until last minute, those involved in the supply chain start planning months in advance. Manufacturers, warehouses, logistics service providers, and retailers begin the ordering and arranging in the late summer months to be ready in time. However, the 2021 season faces pandemic effects on the supply chain and many in the industry have major questions surrounding this year’s peak shipping rush.

The questions are so grand that even the White House has released a series of guidelines and statements about a commitment for more goods from “ship to shelf” ahead of the holiday season. The administration has pushed for measures such as moving the Ports of Los Angeles and Long Beach to 24-hour operations, speaking with the ILWU to have members work extra shifts to clear the backlog, and gaining the cooperation of large US retailers to expand operations and help move cargo as well. Walmart, UPS, FedEx, Samsung, The Home Depot, and Target have all announced commitments to use expanded hours to move more cargo off the docks.

After meeting with President, Port of Los Angeles Executive Director Gene Seroka issued the following statement:

“Operational details are being discussed and worked out with the supply chain stakeholders. The significance of today’s announcement is the commitment from industry leaders responsible for moving goods on behalf of American consumers and businesses to open up the capacity needed to deliver. It’s a call to action for others to follow… The Port of LA is called America’s Port because cargo we handle reaches every corner of the country. In the days ahead, we are committed to continuing to be the convener to ensure the supply chain delivers for the American people.”

This dedicated focus on clearing the backlog of container traffic in the LA/LB port area comes at an essential time as records numbers of ships are being seen off San Pedro Bay at anchor or in drift zones. That number has most recently reached an all-time high of 100 ships with 73 being reported as container ships.

The San Pedro port complex is the busiest hub for US import container traffic, and its terminals handle 40% of the containers entering the country. With the amount of goods consumed in the US largely being imported, and the rise of e-commerce spending, there is more inbound cargo and outbound empties passing through the LA/LB truck gates than ever - roughly 10% more than in September 2019 – before the COVID-19 pandemic hit the global supply chain. 

The ports have been working at somewhat reduced capacity, but the backlog of ships and containers is unprecedented. In a previous bout of congestion in 2014, record number of waiting ships reached 12 vessels, but with pandemic forces and the growth in shipping volume over the past several years, that previous record is immensely eclipsed.

Here are the commitments from the White House Fact Sheet, Biden Administration Efforts to Address Bottlenecks at Ports of Los Angeles and Long Beach, Moving Goods from Ship to Shelf.

The Port of Los Angeles is expanding to 24/7 operations. The Port of Long Beach expanded operations in mid-September. The Port of Los Angeles is now joining them by adding new off-peak night shifts and weekend hours. This expansion means the Port of Los Angeles has nearly doubled the hours that cargo will be able to move out of its docks and onto highways.  

The International Longshore and Warehouse Union (ILWU) has announced its members are willing to work those extra shifts. These workers will add needed capacity towards clearing existing backlogs. This is an important first step, however private businesses within the supply chain will need to also adjust their operations to 24/7.

Large companies are announcing they will use expanded hours to move more cargo off the docks, so ships can come to shore faster. Unlike leading ports around the world, U.S. ports have failed to realize the full possibility offered by operating on nights and weekends. Moving goods during off-peak hours can help move goods out of ports faster. For example, at the Port of LA, goods move 25% faster at night than during the day. These commitments will help unlock capacity in the rest of the system—including highways, railroads and warehouses—by reducing congestion during the day.

• The nation’s largest retailer, Walmart, is committing to increase its use of nighttime hours significantly and projects they could increase throughput by as much as 50% over the next several weeks. 

• UPS is committing to an increased use of 24/7 operations and enhanced data sharing with the ports, which could move up to 20% more containers from the ports.
• FedEx is committing to work to combine an increase in nighttime hours with changes to trucking and rail use to increase the volume of containers it will move from the ports. Once these changes are in place, they could double the volume of cargo they can move out of the ports at night.
• Samsung is committing to move nearly 60% more containers out of these ports by operating 24/7 through the next 90 days. 72% of US homes have at least one Samsung product, from appliances to consumer electronics.
• The Home Depot is committing to move up to 10% additional containers per week during the newly available off-peak port hours at the Ports of LA and Long Beach.
• Target, which is currently moving about 50% of its containers at night, has committed to increasing that amount by 10% during the next 90 days to help ease congestion at the ports.

Although these plans have been set with the proper intentions, experts are warning that it may not be enough to completely alleviate the strain. Many are expecting market conditions to last into 2022 and even 2023 for some of the larger underlying issues such as increased e-commerce demand. The full resolution remains to be seen, but these immediate practices will provide imminent relief to US port congestion and hopefully avoid shortages for the 2021 holiday season.

White House Outlines Efforts to Address Supply Chain Bottlenecks at Ports of Los Angeles and Long Beach - Fact Sheet (gcaptain.com)

L.A. Port to Operate Around the Clock to Ease Cargo Logjams - WSJ

U.S. supply chain too snarled for Biden Christmas fix, experts say | Reuters

Biden aims for 24/7 supply chains, but trucking groups dubious | Transport Dive

New Record: 100 Vessels Are Waiting to Berth at LA / Long Beach (maritime-executive.com)