When it comes to shopping, Americans are used to getting what they want when they want it. But if you’ve gone into a store recently, you’ve probably noticed that the shelves aren’t exactly bursting with products as they once were. Bare shelves are a sign that there are problems with the supply chain, and that’s a problem that affects everyone.
Congestion at the West Coast Ports
Southern California is home to two of the largest ports in the U.S.: Los Angeles and Long Beach. Together they are responsible for 34% of all container traffic at U.S. water ports. So if there are problems there, then much of the country will feel the effects. The American supply chain was already showing signs of strain before the pandemic, but with its arrival the systems simply became overloaded.
The Ultimate Cause: Increased Demand
When Covid-19 hit the U.S. in March 2020, demand for goods temporarily fell. But by April 2020 demand bounced back as consumers shifted their spending to goods rather than services and vacations. And once demand started, it didn’t let up. In June 2021, the Los Angeles port saw its busiest June in the port’s 114-year history.
Problems at the Docks
Many have speculated that Covid outbreaks have affected staffing at the docks. While it has slowed things down from time to time, the bigger issue is not having enough workers in the first place. For example, crane operators are highly skilled and receive lengthy training … and are not easily replaced. So if someone does contract Covid and can’t work, that doesn’t mean replacing him/her is very easy.
Prior to the pandemic, it was rare for more than a few ships to wait off port. In September 2021 as many as 73 were off the coast. But while the ships stacking off the coast are very visible, most of the blame for the congestion lies outside the docks.
Congestion Beyond the Docks
One main culprit of the congestion is that warehouses are filled. In July 2021 it was estimated that there was only a 2% vacancy in warehouses in the Inland Empire, where most of the inventory goes after leaving the Southern California docks. So if the warehouses are filled, then there’s no place to take the inventory from the docks. And if they can’t clear the docks, then there’s less room for them to put the containers that need to come off the ships. It’s a classic domino effect.
But the problems aren’t just with the warehouses. There’s also a shortage on storage containers (mainly because they can’t unload them fast enough), rail cars, skilled truck drivers, and chassis (what is used to transport the storage containers). The delays are themselves causing even more shortages. It is estimated that 25% of container capacity is held up due to the delays.
These are the problems that have existed for years, but exploding demand has pushed them all up to and past their limits.
Forecasting for the Near Future
With all the strain on the supply chain, it should be no surprise that costs are increasing at every level. It’s also hard to predict when exactly shipments will arrive at a warehouse. And all these problems are expected to continue well into 2022.
Larger companies (think Walmart, Amazon, and Target) are chartering their own cargo ships. But while this gives them some control over when they receive shipments and allows them to route the ships to less congested ports, it is far from a cheap option.
So what is a smaller company that needs to get products to their customers supposed to do? The current situation puts into sharp focus how important using a 3PL can be to a business’s success.
How Westhub Logistics Can Help Your Business
We at Westhub Logistics pride ourselves on our communication and customer service. What sets Westhub apart in this region of Bay Area logistics companies is that we are not afraid to start the conversation. There is no set way of running a 3PL company, though we believe having a personable approach has helped us tremendously. For instance, we’ve recently made connections with the ports of Oakland, CA and in the transportation space which allows our clients to establish contact with the right people in order to move the supply chain process forward. Creating these win-win scenarios by helping adjacent companies with service needs promotes goodwill within our industry, leading to more direct ties and earned business.
At Westhub Logistics we practice a client-first approach. We stand out with an unprecedented standard for personalized 3PL services. Our first goal is to listen to your needs and provide you with unique solutions. WHL can work with you to create a customized FBA plan, and you won’t have to pay for unnecessary services. If you are seeking logistics support, we’d love to hear from you, our team is ready to help. Give us a call today 408-585-9346 or send us an email at firstname.lastname@example.org