A trade bottleneck born of the COVID-19 outbreak has U.S. businesses anxiously awaiting goods from Asia — while dozens of container ships sit anchored off the coast of California, unable to unload their cargo.
The pandemic has wreaked havoc with the supply chain since it forced the closings of factories throughout China.
The seeds of the current problems were sown last March, when Americans stayed home and dramatically changed their buying habits — instead of clothes, buying electronics, fitness equipment and home-improvement products.
U.S. companies responded by flooding reopened Asian factories with orders, leading to congestion and snags at ports and freight hubs across the country as the goods began arriving.
Businesses now have to wait months instead of the usual weeks for a delivery from China. And no one knows when things will get better.
Business owners end up having to do a lot of explaining to customers, ordering more inventory than usual and lowering their expectations for when their shipments will arrive.
Alejandro Bras used to be able to place an order to factories in China and expect to receive his products in 30 days. Now, with problems throughout the supply chain, “We’re adding an additional two months,” says Bras, who owns Womple Studios, which sells monthly subscription boxes with educational crafts and activities for children.
Many of the products are custom-made, so he can’t easily find substitutes.
Bras spends more time on logistics rather than product development — and more time apologizing to the Oakland, California, company’s customers, who expect that their monthly shipments will arrive, well, monthly.
The cluster of ships offshore is perhaps the most dramatic symptom of an overwhelmed supply chain. As production surged in Asia, more ships began arriving in the fall at ports in Los Angeles, Long Beach and other West Coast cities than the gateways could handle.
Ships holding as many as 14,000 containers have sat offshore, some for over a week. At times, there have been as many as 40 ships waiting. Normally, there’s no more than a handful, according to the Marine Exchange of Southern California, which monitors port traffic.
“With this type of backlog, it will take several weeks to work through that,” says Shanton Wilcox, a manufacturing adviser with PA Consulting. “And new ships are sailing to the U.S. even as we speak.”
There are choke points on land as well. It can take 8,000 trucks to haul the cargo from a ship, says Kip Louttit, executive director of the Marine Exchange of Southern California. But when those trucks hit the road, there aren’t enough available when dockworkers need to unload the next ships arriving at port. Freight rail traffic also has been affected.
Now, when a ship gets into port, it takes five to seven days to unload instead of two to three, says Shruti Gupta, an industrial analyst with the consulting firm RSM, which “has consequences on truckers and rail service because they have to wait until the port clears.”
Businesses also wait because of the high demand for space on ships and in shipping containers.
“Normally, a shipment can be booked with a couple days’ notice, and currently you have to book containers 30 days in advance,” says Peter Mann, chief executive officer of Oransi, which makes air purifiers and filters and is based in Raleigh, North Carolina.
Supply disruptions can be more serious for smaller companies because they might not be able to shift production to other countries — for example, Western Hemisphere nations whose products can be shipped to East Coast ports. And big companies can better afford air freight, which is more expensive than shipping.
Because there’s so much competition for containers, the cost of importing is rising.
“The price can be as much as five times as usual,” says Craig Wolfe, whose Kelseyville, California, business, named CelebriDucks, has had problems getting rubber ducks from China.
He’s anxious because most of his products aren’t typical rubber ducks — they’re based on presidents and other celebrities and pop culture trends. Like Mann, he’s placed some larger-than-usual orders to ensure he has enough stock.
Exporters also feel the impact. When containers are unloaded at ports, many are sent back to Asia empty rather than being held and filled with U.S. goods.
Isaiah Industries sells metal roofs to Japan, “but we’re having huge delays getting containers scheduled to ship to them,” says Todd Miller, president of the Piqua, Ohio, company.
Miller is also waiting for shipments of raw materials from overseas, including sheeting commonly known as tar paper that’s placed under roofing tiles.
“We can get it produced, but it will take four to six weeks before they can load it on a ship,” he says.