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September 08, 2021

Port Congestion Intensifies, Likely to Continue Into 2022

Backups at ports are a significant factor in the promo industry’s supply chain challenges, which include inventory shortfalls.

By  Christopher Ruvo

Congestion at American ports, one key factor in the promotional products industry’s supply chain fiascos, is poised to get worse. The logjams could continue into 2022, experts say.

The Port of Los Angeles, the United States’ busiest container port, anticipates that this week it will process 35% more inbound import containers than it did the same time last year. Things could get worst the week of Sept. 12, when the port believes it will handle 80% more containers year over year, The Wall Street Journal has reported.

The intensification comes as there have been upwards of 40 ships anchored offshore on a daily basis at the bustling port and its neighbor the Port of Long Beach, all of them waiting to dock and unload containers laden with goods carried from manufacturing centers in China and other nations where domestically sold products are made.

The ramp-up in cargo ship activity is occurring as many industries, including promo, have intensified importing in an effort to have adequate inventory stateside for the holiday season and to meet current soaring consumer demand for a spectrum of goods.

The crush is occurring at other ports in the U.S., too. For instance, the Northwest Seaport Alliance, a partnership between the Port of Tacoma and Port of Seattle, said that on Tuesday, Sept. 7 there were 15 vessels paused at anchor or drifting offshore as they waited for backups to clear so they could unload an estimated 4,000 containers.

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The congestion is likely to continue there and at other American ports, analysts indicate.

The Global Port Tracker study, conducted by Hackett Associates on behalf of the National Retail Federation, says that major U.S. ports will handle a total of 25.9 million containers in 2021, crushing the previous record of 22 million containers set in 2020. In August alone, ports are estimated to have processed 2.37 million containers – a record for any single month since record-keeping began in 2002. In a related note, China’s exports to the United States rose 15.5% year over year in August.

Port executives and supply chain experts believe the challenges at ports – and related supply line issues – will persist into 2022 and potentially beyond.

“There’s a lot of fundamental restructuring going on as a result of the pandemic-induced demand shifts and geopolitics that we are probably 12 to 18 months away from being in a new steady state,” Aaron Alpeter, founder of Izba Consulting, a supply chain consulting, outsourcing and technology firm, recently told ASI Media.

Speaking about port congestion in particular, Mario Cordero, executive director at the Port of Long Beach, told The Wall Street Journal that he doesn’t see “substantial mitigation with regard to the congestion that the major container ports are experiencing. Many people (importers, shipping lines) believe it’s going to continue through the summer of 2022.”

Port congestion is a problem for promo because it contributes significantly to the inventory shortfalls the industry has experienced amid the economic recovery that’s occurred with widespread societal reopening following COVID-related shutdowns. That recovery has driven up demand for a broad range of products, including branded merchandise. And simply put, if products can’t get unloaded efficiently from cargo ships, they can’t be inventoried and ready for sale.

The delays in unloading contribute to container shortages, which reverberate back down the supply chain. An overseas factory may have produced the goods and managed to get them moved to port in, say, China, but there’s no container to load them on since the units are taking longer to get back to origin because they’re sitting on ships or otherwise idling as they await unloading in the U.S. or other Western importing nations.

The backups don’t end once cargo is docked. Rail congestion and inadequate trucking capacity compound the problem, further lengthening the time it takes to get imported product stocked. 

In 2021, rising raw-material prices, congestion at ports, insufficient labor and domestic transport capacity, skyrocketing costs for shipping containers/ocean freight, unfavorable monetary exchange rates and more have resulted in promo experiencing inventory shortfalls, higher product prices, lower customer service levels, longer production times, shortages of important decorating materials like screen-printing ink, and delays in order delivery.