Hundreds of ships are stuck around some of the world’s largest ports, particularly on the West Coast of the US. This prolonged global port congestion, caused by the inability of the biggest ports to handle all arriving ships, is expected to last at least until the first half of 2022.
What are the reasons behind the port congestion?
As the pandemic began, people switched their spending habits from paying for services and experiences to commodities and products. As a result, the demand for consumer products increased rapidly within the last year, making it exceedingly difficult for carriers to meet the demand. Therefore, the United States is receiving record volumes of import goods, producing port congestion and a severe container scarcity.
Other factors contributing to the problem include:
- labor deficiency in warehouses
- lack of skilled truck drivers
- undeveloped rail infrastructure
- shortage of dockworkers
- vessel bunching
- slow productivity
- holiday shopping demand
How is port congestion impacting supply chains?
Container shipping charges increase due to high demand, with rates rising by more than 600 percent for certain companies. As a result, storage and port operation fees are increasing, reducing profits around the world.
Due to this port congestion, empty containers are in short supply in locations where they are needed. As a result, some carriers are skipping stops to avoid congestion, which leaves many empty containers not being picked up on time.
Finally, there is undoubtedly a shipping slowdown that is having a significant impact on global supply chains. The massive delay will continue into 2022, as the holiday season will increase demand. Transportation costs will likely increase due to higher freight costs, port fees, and month-long delays.