NEW YORK (AP) – A trade blockade born of the COVID-19 outbreak has American businesses eagerly awaiting goods from Asia – while off the coast of California, dozens of container ships are anchored, unable to unload their cargo.
The pandemic has wreaked havoc on the supply chain since early 2020, when it forced the closure of factories across China. The seeds of the current problems were sown in March last year, when Americans stayed home and dramatically changed their shopping habits – instead of clothes, they bought electronics, fitness equipment and home improvement products. US companies responded by flooding reopening Asian factories with orders, leading to a chain reaction of congestion and blockages in ports and cargo hubs across the country as goods began to arrive.
Businesses on Main Street now have to wait months instead of the usual weeks for a delivery from China, and no one knows when the situation will be resolved. Owners make many explanations to customers, order more inventory than usual and reduce their expectations for when their shipments will arrive.
Alejandro Bras used to be able to order from factories in China and expects to receive his products in 30 days. Now, with problems along the supply chain, “we’re adding two more months,” he says. And those two months are “unclear” – it can take even longer.
Bras, Womple Studios, sells monthly subscription boxes with educational crafts and activities for children; Many of the products are made to order, so you can’t easily find replacements.
Bras found itself spending more time on logistics than product development and more time apologizing to customers in Oakland, California, who expect a monthly delivery. Customers understand – they realize that the pandemic has upset shipping and global trade.
The group of ships offshore is probably the most dramatic symptom of an overwhelmed supply chain. As production increased in Asia, more ships began arriving in the ports of Los Angeles, Long Beach and other West Coast cities in the fall than the gateways could handle. Ships holding up to 14,000 containers have been at sea, some for more than a week. Sometimes there were up to 40 ships waiting; normally, there is more than one hand, according to the Southern California Marine Exchange, a service that monitors traffic and port operations.
“With this type of arrears, it will take several weeks to solve the problem. It doesn’t go away. And new ships are sailing to the US even as we speak, ”says Shanton Wilcox, manufacturing consultant at PA Consulting.
But there are suffocation points on land as well. It may take 8,000 trucks to transport cargo from a ship, says Kip Louttit, chief executive of the Southern California Marine Exchange. But when all those trucks have gone out of business, not enough is available when the dock workers try to unload the next ships in port. Freight rail traffic was also affected.
“When you have more goods, you have a less efficient system for moving goods,” says Louttit. The pandemic itself is also slowing down the flow of goods, eliminating workers from port warehouses, he says.
Put all the problems together, and when a ship enters port, it takes five to seven days to unload instead of two to three, says Shruti Gupta, an industrial analyst at consulting firm RSM. “This again has consequences for trucks and rail service, because they have to wait until the port is cleared,” she says.
Businesses are also waiting due to the high demand for space on ships and inside shipping containers, which range from 20 to 45 meters in length.
“Normally, a shipment can be booked with a notice a few days in advance and now you have to book containers 30 days in advance,” says Peter Mann, CEO of Oransi, a manufacturer of air purifiers and filters based in in Raleigh, North Carolina. It must take into account shipping times twice as long as normal in its operating plans.
When Mann began to have trouble getting deliveries in the fall, he decided to place larger orders – getting manufactured goods was not a problem, and fewer deliveries meant less waiting time. It meant investing more money in inventory.
Supply disruptions can be a more serious problem for smaller companies because, unlike larger players, they may not be able to transfer production to other countries – for example, Western Hemisphere nations whose products can be shipped to ports on the US East Coast. And big companies can afford to use air transport, which is more expensive than transport.
Because there is so much competition for containers, the cost of imports is rising.
“The price may be five times higher than usual,” says Craig Wolfe, whose company, CelebriDucks, has had trouble buying rubber ducks in China since the beginning of the pandemic.
One of Wolfe’s expeditions stayed on the dock for three weeks because there were no wagons available. Another, which was expected to be shipped in mid-February, has not yet left China.
“It would have arrived by now,” says Wolfe, whose company is based in Kelseyville, California. He’s worried because most of his products aren’t typical rubber ducks – he’s based on presidents and other celebrities and on pop culture trends, such as Harry Potter books and movies. Like Mann, he made a few larger orders than usual to make sure he had enough stocks.
Exporters also feel the impact of blockages. When containers are unloaded in ports, many are sent empty back to Asia, instead of being kept and filled with US goods.
Isaiah Industries sells its metal roofs in Japan, “but we have huge delays until the containers are scheduled to be shipped. So we stay here with orders and products to fill those orders, but we have no way to deliver them, ”says Todd Miller, president of Piqua, Ohio.
Miller is also waiting for deliveries of raw materials from abroad, including foils known as tar paper that is placed under the tile. Its problem is that it competes with any other importer for space on container ships.
“We can produce it, but it will take four to six weeks before they can load it onto a ship,” he says.