In 2020, the ongoing pandemic and associated shutdowns created logistics problems that snarled freight networks across the nation and around the world. Some hoped that as commercial activity returned to normal, those shipping difficulties would turn out to be a temporary issue, naturally working themselves out. In 2021, it’s clear that if anything, freight is even more impacted than before, and it will be a long time before shippers can expect to be able to move their inventories with ease. Here’s what to know about the current state of shipping and what you can do to deal with it.
Supply/Demand Mismatch
In the U.S., the pandemic created a surge in demand for durable goods from overseas at the same time that public health measures were reducing the capacity of the transportation network to process and move them. The most visible indicator of this capacity crunch can be seen at the ports of Long Beach and Los Angeles, which together handle about 40% of the shipping containers entering the U.S. As of October 7, there were 60 container ships waiting for a berth in the two ports to dock and unload their goods. By contrast, prior to the pandemic, it was unusual to have even one ship waiting in open water.
Those cargoes arriving by ship are then meeting trouble on land, starting with reduced trucking capacity. During the pandemic, the number of drivers dropped—according to the Bureau of Labor Statistics, trucking employment decreased from 1.52 million to 1.43 million from February to April 2020. Since then, that figure has slowly risen, creeping up to 1.49 million as of July 2021. However, that leaves the national trucking industry short 33,000 drivers.
The loss of drivers is attributed to a range of factors. These include the fact that 40% fewer commercial driver’s licenses were issued in 2020 compared to previous years, largely due to reduced capacity at driving schools from pandemic shutdowns and social distancing requirements, and increased demand for parcel delivery and related warehouse workers accompanying the sharp increase in e-commerce in 2020 and 2021 (up 35% from previous years, according to a McKinsey & Co. report).
As if that weren’t enough of a challenge, trucking companies simply don’t have enough equipment to meet demand. The manufacture of new trucks is constrained by a shortage of the semiconductor chips needed to make them, which is expected to last at least into 2022. This lack of trucking capacity affects all parts of the supply chain because even cargo that moves largely by ship or rail travels by truck at some point in its journey.
Ships stacked up at sea may be the most obvious sign of a stressed supply chain, but they aren’t the only ones. The congestion that is delaying goods can also be seen in stacks of containers awaiting transport in rail yards and in overstuffed warehouses unable to accept further shipments. Thus, it remains to be seen if the newly announced plan to run the port of Los Angeles around the clock to clear the shipping backlog will have the desired effect. Without similar capacity increases across the transportation network, the bottleneck may only shift, rather than disappear.
Your Shipping Solution
Stranded shipments mean time and money lost. To keep your goods moving, you need a reliable 3PL provider with the flexibility and capacity to provide innovative solutions in challenging times. Westset Logistics is an expert supply chain partner who can help you clear your goods from the ports of Long Beach and Los Angeles, as well as provide warehousing and distribution designed to fit effortlessly into your existing planning. We have the technology and expertise to efficiently adapt to shifting situations, and we work with each of our clients to deliver service customized to your strategic needs and goals. To find out more about how Westset Logistics can help you with effective logistics support in 2021 and beyond, contact us here.