Clock ticking for Christmas imports as West Coast congestion mounts

Date: Wednesday, August 18th, 2021
Source: FreightWaves

The Port Los Angeles — America’s largest container gateway — looks destined to max out this peak season. In fact, it may be maxing out right now.

The port’s throughput numbers for July were announced Tuesday. They were high, but not as high as previously predicted, likely due to supply chain headwinds.

And in August, all of the port’s congestion indicators are flashing red. Conditions at anchorages, terminal yards, railheads and warehouses are deteriorating across the board.

“Every aspect of the supply chain is under scrutiny,” said Port of Los Angeles Executive Director Gene Seroka. “There’s no one lever we can pull right now, but all options are on the table.”

July numbers fall short
A month ago, Seroka estimated that July throughput “will likely land between 950,000 and 1 million TEUs [twenty-foot equivalent units], depending on the anchorage situation.”

The port fell considerably short of that: July total throughput came in at 890,800 TEUs.

Meanwhile, the collapse of exports from Los Angeles continues. Loaded outbound volumes in July totaled only 91,440 TEUs, down 28% year on year. It was the lowest monthly export tally since February 2005.

Empty outbound containers surged 20% year on year, to 329,999 TEUs. As Seroka put it, “Our largest export commodity continues to be air as we reposition empty containers back to Asia.”

Outlook for August-September
The port expects total throughput of 950,000 TEUs this month, considerably higher than July’s volume but below August 2020’s total of 961,833 TEUs. The port expects volumes to fall back to 880,000 TEUs in September, flat versus September 2020.

Could the actual numbers come in lower due to congestion, as was the case in July?

The challenge for Los Angeles is that ship arrivals are rising but land-based capacity to handle added inflows can’t keep pace. Denmark-based consultancy Sea-Intelligence pointed to a “sharp increase in Asia-North America West Coast liner services,” with 53 weekly services currently versus just 39 at this time last year.

As previously reported by American Shipper, inbound ships are already piling up at the San Pedro Bay anchorages of the ports of Long Beach and Los Angeles, with 37 container vessels at anchor on Friday, three short of the record set on Feb. 1 and quadruple the low set on June 18.

‘Trending in the wrong direction’
“Both anchorage and dwell times are trending in the wrong direction,” warned Seroka.

“In July, 75% of ships were stopped at anchor [before heading to berth], up from 50% in June. Early data for August shows that 90% of arriving vessels are headed straight to the parking lot.” That’s the same percentage that went straight to anchor in February amid the previous congestion peak.

The average wait time at anchor was down to five days in July from a high of eight days in March. But as of Tuesday, the average wait time at anchor was back up to 6.8 days.

Seroka said average container dwell time at the terminals is now “at its peak of about 5.3 days.” Street dwell time at warehouses is 8.3 days, close to its spring high of 8.8 days. Rail dwell time “is running over 13 days — a new high,” said Seroka.

Union Pacific and BNSF intentionally cut rail volumes from Southern California last month to reduce pressure in Chicago, impacting about 15% of the port’s volumes. “Dwell times on rail have increased because of this but containers had no place to go,” said Seroka, who believes the railroads had no choice but to throttle volumes.

“Let me sum it up this way: Warehouses are overflowing. Rail yards and carriage are maxed out. Chassis and containers continue to be hard to come by. Ships are coming in and waiting at anchor to get worked. And factories are behind in orders, even though output is at record levels.”

Risk to Christmas sales
If the trans-Pacific shipping system maxes out soon, some Christmas retail sales could be at risk.

When asked about holiday demand, Seroka explained, “We’ve seen an early pivot to peak season by the import community to make sure they take into account these knots in the supply chain and the overall transit time they need to get the products in. The import community is going to have to digest this surge in cargo at an even faster rate than they’ve shown a propensity to do before.

“As for American consumers, they should take a look online early and go to their favorite retail stores in the neighborhood a little bit earlier than normal with their list for the year-end and Christmas holidays,” he advised.

“Everybody’s going all out to try to make sure that we meet these important milestones,” Seroka said. “This incredible sustained demand has everyone pushing at top speed, yet we still have much more work to do.”

 

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