The supply chain streams around the US ports have faced a major challenge ever since the start of the Covid-19 pandemic. Even with the government’s efforts and ease in the queues of key terminals, importers should still be wary of US port congestion challenges, given that the number of vessels stranded still goes up and down around the country.
The situation shouldn’t be treated as something extraordinary. Dealing with the bottleneck is a continuous struggle as consumer behavior changes often and peak seasons continuously impact container flow. Therefore, competitive companies and professionals must look for data analysis solutions that optimize freight logistics.
For example, prior to crucial dates such as Black Friday, it is almost certain that the ports will be clogged – even more with the existing queues. A data-driven approach will help importers to find the best alternatives and gaps to fulfill their deadlines.
In this article, you will understand exactly what is the current state of US port congestion, how to overcome such challenges, and get access to free special content about the future of foreign trade and supply chain.
- What is causing the US ports’ congestion?
- What is the current state of the US ports’ bottlenecks?
- What is the Freight Logistics Optimization Work (FLOW)?
- 5 things you can do to overcome the US ports congestion challenges
What is causing the US ports congestion?
There are several reasons to blame for the logjams – from consumer behavior to factories and retailers picking up the production –, but the reality is that the Covid-19 pandemic only aggravated a running situation. Before the pandemic, the freight rates were impacted, among other things, by the fiercely China-US trade war.
After the pandemic exploded, there was an initial shortage of demand in 2020 due to production lines being diminished or entirely closed. Fast forward a few months and we see the complete opposite when factories and carriers ran to fill up the growing demand.
Consequently, lines and lines of containerships anchored offshore, waiting to land their goods and board the next ones to set off right away. That caused a crisis in the circulation of vessels, which led to a lack of storage units to carry crucial goods and a reorganization of the supply chain of many companies. One of the main examples is the semiconductor shortage that is still striking the automobilists and tech industries.
Another facet of the problem is that ocean carriers are keeping their containers as close as possible to the ports in order to use them when needed. That means long inland traveling is less likely to be quoted by those companies, leaving you to find an economic and effective way to move your goods.
What is the current state of the US ports congestion?
Things might not be as bad as in the last couple of years, still, the overall count of queued vessels around the US coast continues to be significantly high.
In February 2022, the congestion in all American ports reached 150 ships anchored offshore. On the occasion, the Los Angeles-Long Beach port (LA-LB), one of the most popular for inbound container cargo, was absolutely overwhelmed (reaching an astonishing 109 ships queued in January).
Looking forward to easing the traffic in such an important terminal, a rerouting strategy was put in motion. Therefore, most containerships started to be redirected to the East and Gulf coasts. Which eventually had its expected effects, the congestion in the LA-LB port dropped exponentially, reaching just 9 ships lined up. Also, around June, things were looking promising, as the number of vessels waiting to port dropped to 92.
But, every action has a proportional reaction. While space was freed up at LA, the aforementioned East and Gulf coast ports received the surplus, as well as other terminals on the West coast (such as Vancouver and Oakland). By the end of July, the tides turned again, when we reached a new year-high, 153 containerships in line (62% of them between Savannah, Houston, and New York).
What is the Freight Logistics Optimization Work (FLOW)?
Amongst the measures to fight the congestion, the government is working with several global firms – truckers, shippers, wholesalers, retailers, and ports – to build a new tool to ease the bottlenecks.
The Freight Logistics Optimization Work (FLOW), conducted by the U.S. Transportation Department (USDOT), is a data-sharing project, per a Reuters report. The goal is ‘to develop a digital tool that gives companies information on the condition of a node or region in the supply chain”.
Still, this tool is not to be taken as an immediate, nor definitive, solution to US port congestions. Sure, it will organize important information about the cargo flow, but any business that wants to be truly efficient will need a trustworthy platform to pick, analyze and organize large piles of data. This way, you’ll make more assertive and safe decisions.
5 things you can do to overcome US ports congestion
Now, you must be asking yourself, “If the congestion won’t decrease anytime soon, what do I have to do to not be ahead of any delays?”.
Well… there isn’t a sure way of avoiding all sorts of queues. Yet, you can plan and establish best practices so that port bottlenecks won’t have a huge impact on your deadlines and stock management. So, these are five ideal factors to introduce to your commercial arrangements:
- Research other port locations
- Map other viable modes of transportation
- Be aware of other factors that might cost you money
- Use data analytics tools
It may sound a little too obvious, but a well-thought plan can’t be substituted. The whole process of foreign trade in itself needs a lot of organization, and when you add obstructing variables, like the congestion of ports, a little preciousness is not that bad.
That’s why you need to preplan considering the current scenario and aggravating factors that might occur.
For instance, even before your cargo is discharged, it is recommended that you make a pre-appointment to avoid scrambling for space when your goods are delivered. Also, be sure to properly have your shipping documents separated to do an express release or another possible format the port allows.
Research other port locations
The way routes are calculated is significantly different than two years ago and the main reason is the congestion. The whole scheme of transportation, from the international seas to the inland shipment, could be analyzed more directly in the past. Now, you need to consider how many days or even weeks your cargo will be stranded offshore.
That’s why, especially depending on the urgency, it might be a good choice to consider other manageable ports. Each region has more than one strategic port that can be used to not have your goods parked.
Map other viable modes of transportation
The big headache of this crisis is the shortage of container availability. As we described above, it’s not that they don’t exist, they are actually stopped in traffic.
So, you will need to get creative. Consider other forms of shipping, like break bulking and roll-on/roll-offs. If the containers are a must for your goods, think of ways to rush the drayage, like taking it to container freight stations (CFS) and cross-docking your cargo into a domestic trailer.
Be aware of other factors that might cost you money
Even in normal circumstances, shippers would be wary of demurrage and detention fees, but with overflowing ports, the attention to such costs needs to be doubled.
So take this short advice: learn what are the number of free days you have in each terminal, research the flow of traffic inside and outside the port and dedicate emergency resources to cover those fees in case of delays.
Use data analytics tools
Finally, a tip that covers all the other elements. Get data analytics tools to help you predict and act accordingly to such situations.
There is so much information available, throughout so many different databases (public and private), that the biggest problem is how dispersed it is. However, you need them selected and organized to gain time and efficiency in decision making – and we know that even with proper preplanning you need agility.
To enjoy these benefits, you can resort to Big Data solutions, that allow an environment aimed at analyzing the movement of global supply chains.
Build Supply Chain Resilience
The digital transformation of global trade processes is the only way to face major setbacks, like the US port congestion. Through all sorts of new technologies, from supply chain flows to payments and smart contracts, it is your role as an entrepreneur to be resilient and build an operation for the future.
If you’re unsure where to start, we’ve prepared a free ebook to show you how digital transformation can increase supply chain resilience. Click here and learn how to start your own transformation to the future!