Oct 15, 2021
Port Congestion Update (Part 3)
In our last blog, we examined some of the significant factors causing coastal port congestion. Today, we explore the impact of coastal congestion on the everyday consumer.
At the end of the 2008 film The Hurt Locker, a soldier returning from combat duty stands, in a grocery store, seemingly overwhelmed by the cereal options laid out before him. The scene represents the abundance and choice Americans in particular have come to enjoy and, perhaps, take for granted. Today, the hyper-efficient, globalized supply chain responsible for that expectation has been thrust into chaos. Here are some of the impacts we’re currently seeing:
- Delivery Delays - Obviously, products stuck in the ports are going to be delayed getting to consumers. The situation is creating enormous headaches for the logistics industry at large and the every day consumer. From trucks carrying raw materials to manufacturers to sprinter vans tasked with last-mile delivery, carriers and drivers play a crucial at every stage of the supply chain. To add to the growing dilemma and the time it takes to unload product, it’s spoiling, exceeding it’s expiration date and thus new product is needed and the cycle starts all over again.
- Shortages - Grocery store inventory has not fully rebounded since the early days of the Coronavirus. According to the analytics firm IRI, retail stores reported around 15% of frozen foods, 18% of beverages, and 16% of snack goods were out of stock during the first week of October. Consumers are left standing in awe at bare store shelves and the lack of inventory. A computer chip shortage alone is responsible for major disruption to the automotive, appliance, and consumer electronics industries.
- Price Hikes - In response to low inventory and a surge in demand, many companies have no choice but to raise prices. To curb demand, some suppliers are reportedly telling retailers to cancel promotions. This means that customers will pay more for items once intended for discount.
- Holiday Hustle - The acceleration of an earlier and earlier holiday season is, of course, only amplifies limited inventories, worker shortages, longer shipping times, and fewer discounts and promotions. Retailers are encouraging shoppers to shop earlier but there is no guarantee consumers will get everything on their lists. With 24/7 operations now taking effect at the Port of Los Angeles to help with clearing the backlog, everyone is left wondering if will this be enough to ensure retailers have inventory for holiday shoppers.
In an effort to circumvent the gridlock at coastal ports and get items to their customers, retail giants like Walmart have taken matters into their own hands. They are charting independent ships and sending them to nearby bulk cargo docks to unload. While this practice may sound like a smart solution, it is not free of challenges. Most notably, the lingering worker shortage and the absence of giant cranes needed to move containers from ships to trucks.
Stay tuned as EASE continues to cover the latest news and developments on coastal post congestion. In the next blog update, we dig a little deeper into the critical role truck drivers play in the supply chain. Read part 4.
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