While global supply chains remain badly broken, there are signs that US-based ocean freight bottlenecks, driven by broader global supply chain problems and capacity constraints, are subsiding. As a leading e-commerce fulfillment company, we keep our eyes closely trained on these trends. Understanding the following conditions will help to explain reduced US port delays:
Container Spot Quotes are Down
Bloomberg is reporting that long-term ocean freight rates between China and the US West Coast are higher than spot prices for the first time since April 2020. Shipping costs on transpacific routes are easing but are still above pre-pandemic levels.
Falling spot quote rates indicate available capacity and potentially fewer ocean shipments to the US which should further ease port congestion this holiday-Shipping-Season.
Shipping Delays are Down
The pictured Morningstar graphic gives us a snapshot of global supply chain disruptions and indicates a 7- day delay at California ports, double the pre-pandemic level. However, CNBC reports that the queue of vessels waiting to unload goods at the Port of Los Angeles, North America’s busiest container port, has fallen 80 percent since the start of the year, so we are seeing an improvement in port delays at the Los Angeles-Long Beach complex.
California Ports Operations/Process and Technology Improvements
The Golden State continues to fund operational and technology improvements, allowing the port authority to manage goods movement more efficiently and improve operational process management.
The Port of Los Angeles has also seen a 77 percent reduction of containers dwelling nine days or more since the end of October 2021. The Port of Long Beach also has a corresponding 56 percent reduction. This totals a combined reduction of 68 percent.
A Slowing Economy: Fewer Port Delays
Finally, a slowing US economy is the primary reason why west coast port congestion is down and should continue to trend downward this holiday-shipping season on a year-over-year basis. Walmart and Target have been very public about their excess inventory problems. The two big-box retailers have recently announced the cancelation of booked product orders totaling billions of dollars. That’s billions of dollars of product inventory that will not now have to pass through LA and Long Beach ports.
The global supply chain condition is still a mess. However, US west coast port congestion is easing.