Our industry, and many others, continue to be impacted by disruptions along every step of the supply chain. TVF is working hard to understand the best path forward, and communicate back to you, our customers. Our commitment to you is to keep you updated and aware so you can plan and ask the right questions. We urge you to reach out to us online or directly with your Sales Consultant to start the conversation.
Here’s what we know right now:
Congestion in domestic ports has not yet peaked.
Currently the average time to offload is 8.7 days compared with 6.2 in mid-August, according to L.A. port data. The number of container ships waiting to enter the biggest U.S. gateway for trade with Asia reached an all-time high of 65 vessels, carrying potential payloads of cargo boxes that would stretch halfway across the country if lined up end to end.
Even with delays, the ports have broken monthly cargo records regularly since last summer. The Long Beach port is on pace to process more than 9 million container units this year, exceeding last year’s record of 8.1 million units, the most in the port’s 110-year history. Meanwhile, the Los Angeles port in June became the first western hemisphere port to process 10 million container units in a 12 month period.
Asian ports are experiencing similar challenges with increased volume.
Traffic from Asia to North America has worsened as the number of vessels awaiting berths has surged in recent weeks at destination (70 vessels awaiting berth at LA/LB) and particularly at origin (150 doing the same at Shanghai and Ningbo). Sustained peak season demand from Asia to US continues to produce congestion flare-ups, which in turn breed bottlenecks and strains elsewhere on the trade lane. This cycle of pileups worsening, improving, and worsening again is proving to be the new normal and is expected to continue at least through the New Year and likely until inventories are replenished to sufficient levels.
According to Hong Kong-based Freightos, an online shipping marketplace, China-to-U.S. transit times for ocean freight reached 71 days door-to-door this month, up from 40 days two years ago.
Power use restrictions
Power use is now being curbed by tight supply and emissions restrictions in the Chinese provinces of Jiangsu, Zhejiang and Guangdong. As a result, we’re hearing from our sources some manufacturers are on a schedule of being operational for five days then shut down for five days
Bloomberg quoted Nomura analyst Ting Lu as stating, “The power curbs will ripple through and impact global markets. Very soon the global markets will feel the pinch of a shortage of supply from textiles and toys to machine parts.”
Chinese New Year
During CNY, every factory in the country shuts down… yes, every factory. The official public holiday only lasts for seven days, most factories are fully closed for between two and four weeks.
Additionally, many Chinese factory workers take extra time off, leaving in the weeks leading up to their company closure dates, which slows production down significantly. Many workers will not return immediately afterward, meaning that it can take up to a month for production to return to full capacity after the holiday.
How should you respond?
Call us at 855-618-4500. We’re talking with our suppliers and monitoring our supply chain daily. Although this is a challenging time for everyone, communicating your needs early and often will help mitigate potential problems and allow us to help you find the best possible solutions for your business.