It has been a year and a half since the first warnings about COVID-19 forced the United States onto an economic path that defied precedent and experience. The reason, of course, is that we had neither in dealing with an economy that groaned to a halt based on a viral pandemic that required us to mask, stay at home and avoid personal contact to protect ourselves and slow the spread of the virus.
Except for medical workers, first responders and essential service providers, America learned how to shut itself down. Restaurants, theaters, gyms, sports venues, places of worship, schools, non-essential factories and so many others were forced to suspend or reduce operations. This resulted in much of the workforce learning to work remotely from their homes. This went on for months, and only gradually has it eased since the arrival of vaccines that helped mitigate the spread of the virus and protected the ability of the populace to fight the infection.
Concurrently, the government approved rounds of stimulus checks to help the house-bound workforce make up for wages lost. So, with stimulus money in their hands and hardly any services to spend it on, people started buying stuff – things like electronics, exercise equipment, furniture, home-improvement goods and so much more. Many, if not most, of these things were made in foreign countries that shipped them to us in the massive container ships that are bottlenecked in our nation’s ports.
Not only did we start ordering things, but the whole country was doing this at the same time. What started as a binge of ordering stuff, much of it done online, turned into the deluge of incoming goods that are currently stalled in our seaports. To one degree or another, this is happening in all our ports, but it is especially acute in the larger ones, such as the Los Angeles/Long Beach facilities in California, which receive 40% of all incoming containers to the U.S. because of their proximity to Asian shippers.
Container ships in waiting at the Los Angeles/Long Beach complex numbered fewer than 20 in mid-October 2020, but the number of ships tripled to more than 50 one year later. By the time you read this, that number will likely be higher. To help with the bottleneck, President Biden ordered major seaports to commence 24/7 operations on October 13. This has helped ships discharge their containers for storage on shore to await their loading onto chassis, the “trailers” designed to accept containers and be hauled away by truck drivers.
However, this presents three additional logistics problems. First, there are insufficient drivers to haul away the off-loaded containers fast enough, thus choking off even the land space in these major sea-ports. Drayage, or the local removal of containers to other nearby storage facilities, can help port congestion, but there is still a shortage of drivers to execute this strategy. Second, even once a ship dis-charges its cargo, it does not leave for its home port empty. It awaits a load of empty containers to carry back, further exacerbating the backlog in the shipping lanes. Third, there is a global shortage of the chassis used to haul the containers away, and some of these are stuck under empty containers waiting to be dispersed. In an irony almost too rich to be true, most of these chassis are manufactured in – you guessed it – China.
The space in this column is woefully insufficient to fully cover this matter and all its implications, but a related issue of immediate concern is the costs of shipping a container. The cost to ship a container from China to the U.S. was about $3,000 one year ago. Since then, the cost has soared to $20,000-30,000. The inflationary implications to the cost of imported goods should be obvious.
In researching this column, I have not encountered a single forecast that suggested things will improve anytime soon. Most economists and industry pundits agree that, with consumer binges like Black Fri-day behind us and imminent Christmas shopping, the bottleneck in our seaports will get worse before it gets better. I believe things will get better but only gradually and not without a continued inflationary jolt.
The staff of FORGE thanks you for your readership and wishes all of you a healthy, happy holiday season and a prosperous new year.
Editor Dean M. Peters has written extensively on metalworking markets and the issues that affect them. Dean’s technical journalistic experience extends to 40 years, including his time at FORGE. His strong journalistic credentials are enhanced by his BS in metallurgical engineering. He can be reached by e-mailing ForgeEditor@forgemag.com.