Overwhelmed and Inundated
This story, one of six, is from the latest edition of BBA Economic Digest, a weekly online publication for economic developers and business people. Subscribe?here.
Nearly 80,000 shipping containers are currently stacked in various configurations at the Port of Savannah — 50 percent more than usual.
Some 700 steel boxes are waiting at the port for ships to carry them to their final destination, or for trucks to haul them to warehouses that are themselves stuffed to the rafters.?
“The supply chain is overwhelmed and inundated. It’s not sustainable at this point. Everything is out of whack,” Griff Lynch, the executive director of the Georgia Ports Authority, told The New York Times.
What is now being called the "Great Supply Chain Disruption" is characterized by the largest ports in the United States running out of space to put things.?The staggering pileup of cargo is increasingly viewed as a new reality that could require a substantial refashioning of the world’s shipping infrastructure.
As the Savannah port works through the backlog, ships are having to wait at sea for more than nine days. More than 20 ships were stuck in the queue, anchored up to 17 miles off the coast in the Atlantic, on a recent afternoon.
Such backups have become common around the globe, from the more than 50 ships marooned last week in the Pacific near Los Angeles to smaller numbers bobbing off terminals in the New York area, to hundreds waylaid off ports in China.
The cost of shipping stuff in containers has gotten so out of hand that Coca-Cola Co. is switching its cargoes to vessels that are normally only used by industrial commodity traders to help keep its business running.
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Walmart, Home Depot, Costco and Target—some of the biggest U.S. retailers by revenue—are among the companies that are now paying for their own chartered ships as part of wider plans to mitigate global supply-chain disruptions
Chartering ships is a tactic that is out of financial reach for small retailers, giving large companies a potential advantage in the coming months. Some of the chains are passing along these added costs by raising prices.
The chartered ships are smaller than those that companies like Maersk operate and move just a small slice of total imports, the executives said. Ships that can hold around 1,000 containers are on average nearly twice as expensive as the cost of moving cargo on a typical 20,000-container vessel, according to freight forwarders.
But the charters provide the big retailers with a way to work around bottlenecks at ports such as Los Angeles, by rerouting cargo to less congested docks such as Portland, Ore., Oakland, Calif., or the East Coast. It also could help retailers ensure that key products such as electronics and décor arrive for the holiday season.
The?turmoil?in the shipping industry and the broader crisis in supply chains is showing no signs of relenting. It stands as a gnawing source of worry throughout the global economy, challenging once-hopeful assumptions of a vigorous return to growth as vaccines limit the spread of the pandemic.
The disruption is one reason why inflation?has become a cause for concern among central bankers, and why American manufacturers are now waiting a record 92 days on average to assemble the parts and raw materials they need to make their goods, according to the?Institute of Supply Management.
Dean Barber is the principal of BBA, a Dallas-based advisory firm, and publisher of BBA Economic Digest. For more information, go to barberadvisors.com
SBA-funded SCORE volunteers chapter chair in Billings, serving the Eastern half of MT, Northern half of WY, and Western half of SD.
3 年Just in Time never did work very well despite it's unthinking love from consultants and CFO's and ordering buffer supplies ("stockpiles" in old language) has always gone on. But extending supply chains for too many inputs across oceans and countries with inadequate transportation networks (and power grids, corruption, etc.) has made many companies so fragile this full fiscal quarter instead of a month you cite will cripple many. Inflation and shortages along with wage growth driven to maintain the workforce (not seen since World War II for all of these at once) exacerbates that as it means the price agreed on at the time of sale can be no longer profitable or affordable by the time 3-8 months later the order is actually filled...restaurants already have that problem with a very short period from field to table. It's certainly survivable but requires stronger logistics and operations skills than many companies have, a good time to bring freight managers inhouse and hire more industrial engineers probably.
Supply chain expert, Frequent speaker at professional programs, Site selection & EDO strategy consultant, Top 500 CEO in Dallas 2019 & 2020 by D CEO Magazine.
3 年This is one of the many elements in this global crisis. It is repeated all around the world at other points of origin and destination. Thanks for the post Dean Barber. I am afraid that this will be a very long time in unwinding itself as well. Too many disruptions caused by many issues- Covid, worker shortage, containers not in the right place for unloading or loading, manufacturers shut down, truck driver productivity, etc. making this not a singular element we can attack and "fix". We must not take our eye off the ball here and do what we can to "fix" what we can in our purview of control with as much gusto as we can generate. All of us pulling together with our part of the issue will at least give us some hope of getting to the fastest end to this crisis.