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Ships are stranded, and companies are stymied due to supply bottlenecks.

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Ships are stranded, and companies are stymied due to supply bottlenecks.
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Ships are stranded, and companies are stymied due to supply bottlenecks.

Ships are stranded, and companies are stymied due to supply bottlenecks.

 

U.S. companies are anxiously awaiting supplies from Asia due to a trade bottleneck caused by the COVID-19 outbreak, while hundreds of container ships remain anchored off the coast of California, unable to unload their cargo.

Since early 2020, when the pandemic forced the closure of factories across China, the supply chain has been disrupted. The seeds of today’s problems were sown last March, when Americans stayed at home and drastically modified their purchasing habits, opting for electronics, exercise equipment, and home improvement items instead of clothing. As the goods started to arrive, U.S. businesses flooded reopened Asian factories with orders, causing a chain reaction of congestion and snags at ports and freight hubs throughout the world.

Main Street companies are now forced to wait months for deliveries from China, rather than the normal weeks, and no one knows when the crisis will be resolved. Customers are given a lot of reasons, more inventory is ordered than normal, and customers’ standards for when their shipments will arrive are lowered.

Alejandro Bras used to be able to put an order with Chinese factories and expect his goods within 30 days. “We’re adding an extra two months,” he says, citing issues in the supply chain. And even two months is “uncertain” — it might take even longer.

Womple Studios, Bras’ company, offers monthly subscription boxes filled with instructional crafts and activities for kids; many of the items are custom-made, so he can’t easily find substitutes.

Bras has found himself spending more time on logistics than product creation, as well as apologizing to the Oakland, California-based company’s customers who expect a monthly shipment. Customers have been understanding, as they know that the pandemic has affected global shipping and trade.

The swarm of ships off the coast is maybe the most visible sign of an overburdened supply chain. As Asian production increased, more ships arrived at ports in Los Angeles, Long Beach, and other West Coast cities in the fall than the gateways could accommodate. Ships carrying up to 14,000 containers have been stranded offshore for more than a week. According to the Marine Exchange of Southern California, a service that tracks port traffic and activities, there have been as many as 40 ships waiting at times; usually, there are just a few.

“With this kind of backlog, it’ll take a few weeks to get through everything. It isn’t going anywhere. And new ships are heading to the United States right now,” says Shanton Wilcox of PA Consulting, a manufacturing adviser.

On the other hand, there are choke points on ground. According to Kip Louttit, executive director of the Marine Exchange of Southern California, hauling cargo away from a ship will take up to 8,000 vehicles. When all those trucks hit the lane, however, dockworkers won’t be able to unload the next ships in port because there won’t be enough trucks left. Train freight traffic has also been impacted.

“You have a less effective cargo movement system when you have more cargo,” Louttit says. According to him, the pandemic is restricting the movement of goods and putting workers in warehouses at ports out of jobs.

When all of the issues are considered, it takes five to seven days for a ship to unload instead of two to three days, according to Shruti Gupta, an industrial analyst with the consulting firm RSM. “This has repercussions for truckers and rail service, as they must wait until the port is cleared,” she says.

Businesses must also wait due to high demand for space on ships and inside shipping containers varying in length from 20 to 45 feet.

“Normally, a shipment can be booked with a couple of days’ notice, but now you have to book containers 30 days in advance,” says Peter Mann, CEO of Oransi, a Raleigh-based manufacturer of air purifiers and filters. In his operational plans, he must prepare for shipping periods that are twice as long as average.

Mann wanted to place larger orders when he started having problems getting shipments in the fall because getting the product manufactured wasn’t an issue and less deliveries meant less waiting time. It has necessitated a greater investment in inventory.

Smaller businesses face a greater risk of supply disruptions because, unlike larger businesses, they might not be able to move production to other countries, such as Western Hemisphere nations with goods that can be exported to East Coast ports. Air freight, which is more expensive than rail, is therefore more affordable for large businesses.

Importing costs are increasing as a result of increased competition for containers.

“The price can be up to five times what it is normally,” says Craig Wolfe, whose company, CelebriDucks, has had trouble obtaining rubber ducks from China since the outbreak began.

Since there were no railcars available, one of Wolfe’s shipments remained on the dock for three weeks. Another shipment that he scheduled to leave China in mid-February has yet to arrive.

Wolfe, whose business is located in Kelseyville, California, says, “It would have arrived by now.” He’s worried because the bulk of his items aren’t ordinary rubber ducks; they’re focused on presidents and other celebrities, as well as pop culture phenomena like the Harry Potter books and films. He’s ordered some larger-than-usual orders to ensure he has enough stock, just like Mann.

The effect of bottlenecks is also felt by exporters. When containers are unloaded at ports, many of them are sent back to Asia empty rather than being stored and filled with American goods.

“We sell metal roofs to Japan,” Isaiah Industries says, “but we’re having big delays getting containers scheduled to ship to them.” As a result, we’re sitting here with orders and product to fill them, but no way to ship them,” says Todd Miller, president of the Piqua, Ohio-based business.

Miller is also awaiting shipments of raw materials from abroad, including tar paper sheeting, which is used to cover the underside of roofing tiles. His issue is that he is fighting for space on container ships with any other importer.

“We can have it made,” he says, “but it will take four to six weeks for them to load it onto a ship.”

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