Shipping Bottlenecks Hit Port of New York and New Jersey
A backup of vessels is growing at the East Coast’s busiest container import gateway as rising stacks of empty boxes clog docks
Officials at the Port of New York and New Jersey expect a stronger rush of shipments in summer as the peak shipping season begins.
The cargo surge swamping U.S. ports for almost two years is starting to overwhelm the Port of New York and New Jersey.
A backup of container ships waiting outside the East Coast’s busiest port last week reached an average of 14 vessels a day, the highest it has been since the Covid-19 pandemic began battering supply chains.
Port officials are talking to ocean carriers, truckers and warehouses to ease the logjams amid expectations of a stronger rush of shipments in summer as the peak shipping season begins, said Rick Cotton, executive director of the Port Authority of New York and New Jersey.
“It’s all hands on deck to try to pull every lever that’s available,” he said.
The backup is a concern for shippers seeking alternatives to the nation’s busiest container port complex at Los Angeles and Long Beach, where congestion has severely delayed shipments and where looming labor contract negotiations with West Coast dockworkers could threaten further disruptions.
Lengthy backups have formed since last year at California’s Port of Oakland, the Port of Savannah, Ga., and the Port of Charleston, S.C., as container ships sought to sail around the Southern California congestion. Container volumes have swamped port operations for weeks at a time, delaying deliveries of electronics, apparel and other goods.
New York and New Jersey weathered last year’s roughly 20% nationwide increase in cargo imports better than other U.S. ports, but that started to change this year as import volumes slowed on the West Coast and continued to climb in the east.
The sustained rise in East Coast imports is being driven, in part, by retailers and manufacturers trying to spread supply chains and avoid having most of their inventories stuck at a single port.
Double-digit import growth at the Los Angeles-Long Beach complex slowed to 2.7% in the first quarter from a year earlier. At New York and New Jersey, first-quarter imports rose almost 12% from the same period last year.
Bethann Rooney, who took over as director of the New York and New Jersey port operations on May 2, said the port’s cargo-handling facilities began struggling early this year as shippers took longer to pick up imports from docks and as empty containers piled up waiting to be returned overseas.
She said the port’s container yards are clogged with 120,000 empty boxes, more than double the usual number. The port plans to open 10 acres of land to store empty boxes and ease some of the congestion.
The buildup of containers is slowing cargo-handling operations and frustrating truckers, who said privately-operated cargo-handling facilities are refusing to accept empty containers for days or weeks, which ties up their trucking equipment.
Thomas Villacampa, regional vice president at trucking firm H & M Intermodal Services in Kearny, N.J., said more than half of his fleet of 400 trailers for hauling containers is stuck holding empty boxes waiting to be returned to the port. That prevents his drivers from picking up imports and delivering cargo to warehouses and distribution centers.
“It cripples us,” Mr. Villacampa said. “If we were able to return these empties we could probably do two to three times more than we are doing now.”
The increased congestion at the Port of New York and New Jersey coincides with a seasonal lull in shipping and as Covid-19 lockdowns in China have cut into manufacturing, slowing imports. But Ms. Rooney said she expects a sharp upturn in imports in a few months as the peak shipping season begins, adding the port is working to get facilities operating as efficiently as possible by then.
Port congestion has been a leading cause of product shortages during the pandemic and has helped fuel higher freight rates and supply-chain costs, which have helped push inflation in the U.S. to a 40-year high.
Under pressure from the Biden administration, ocean shipping lines relieved congestion at West Coast ports in recent months by sending additional ships to pick up empty boxes.
Ms. Rooney said she asked representatives of some of the world’s largest ocean shipping lines on Monday to provide similar relief for her port.
Ms. Rooney said she told them, “We’ve got a problem in New York, New Jersey with empties, and I need them to solve it proactively because we don’t want the White House…coming knocking on our door.”
Source: WSJ
Freight Fright?
All the talks of doomsday predicting the decline of freight demand and shifts in the industry were for naught.
Economists continuously speculated that once the COVID stimulus money ran out, consumers would switch their spending habits. Instead of buying products, consumers were going to shift sharply back to spending on services like dining out or travel.
Except that’s not what’s happening.
Online Outshined
One thing is for certain, e-commerce was an undervalued and unaccounted for market. This pandemic debacle has shown light on just that. US consumers are purchasing more online than ever before with no signs of letting up.
Overly In-Stock
Another factor to consider is that big box stores like Home Depot or Walmart have been overstocking their warehouses to prevent shortages.
Out Spent
So all though service-based spending have risen well above pre-pandemic levels, durable goods spending is also higher than February 2020.
More demands for products means that stores will stock up more causing manufacturers to produce more, all leading to a strong freight demand across the US.
Things don’t always play out as predicted.
Source: JOC
Shanghai Shenanigans
Can we get a hallelujah?
China is slowly opening up, almost as slow as they are to staff they are working to staff rail, port and trucking workers. Without these key elements fully functioning, the shipping snarl won’t ease up.
Governments are doing their best to prepare for the impending influx of goods which will be released from China but labor and infrastructure shortages are still in existence. The global supply-chain congestion is nowhere near easing.
Waiting Games
Shenzhen and Hong Kong hit a seven-month high of 184 vessels waiting in the area compared to the 95 of last year at this time.
The amount of vessels waiting in queue in the Shanghai and Ningbo-Zhoushan region is still 11% above the median in the last year with 130 ships waiting outside of Shanghai's port alone.
Over the last week, there has been a decline in the amount of goods moving in and out of the Shanghai port. Some shippers are opting to use air routes but are facing flight cancellations due to staffing shortages.
Cherry on Top
To top it all off, the US is also experiencing a shortage of truck and rail workers making it difficult for industries to move goods adding to the pile ups outside of ports.
Guess we’ll have to leave the hallelujah for Leonard Cohen to sing.
Source: AJOT