These ports cause the most congestion in the supply chain
Shanghai port’s drop in productivity, which is due to lack of people working due to Covid lockdowns, can be seen in container dwell time at the port, according to new supply chain heatmap from CNBC.
“In Shanghai, shipping terminals, warehouses and trucking services are operating normally, but with lower efficiency due to understaffing and lack of drivers,” said Brian Bourke, chief growth officer of SEKO Logistics.
The CNBC Supply Chain Heatmap is a new data tool created by CNBC with 10 of the world’s leading shipping and logistics data providers. It shows the dozens of challenges facing the global supply chain in real time, so investors can understand the inventory issues facing businesses.
Trade is a forward-looking indicator of a country’s economic health as well as a company’s supply chain. A ship at rest makes no money. A container at rest means inventory problems. The heatmap tracks all critical elements of the supply chain: plant capacity, vessel availability, container availability, trucking capacity, port productivity, vessel transit time and rail capacity.
Tesla announced last week that it was being forced to cut vehicle production in its Shanghai due to lack of parts. Toyota had to halt production at eight plants in Japan for the same reason. The company said its May production for Lexus and Toyota would be reduced due to the lockdowns. Automakers Volkswagen, Mazda, General Motors also had to cut production as a result.
The gradual easing of Shanghai’s lockdown is set to begin on June 1, but details are vague.
“This gradual reopening is largely dependent on the number of cases in your region and your building,” said Jasmine Wall, general manager of growth, marketing and communications, Asia-Pacific, at SEKO Logistics. “Some people have been granted a two-hour permit to shop, but the majority remain completely confined.”
US Supply Chain Overview
The supply chain heatmap shows that the challenges don’t end in China.
According to data from MarineTraffic and Blume Global, the Port of Oakland tops the list for traffic congestion with ships taking six days to unload and load. Import containers linger for almost 11 days in the port before being transported. The Port of Los Angeles is second in terms of wait times, with nearly 12 container days to leave the port and five and a half days for vessel processing. Rail delays of 6.2 days are also hurting port productivity.
“Today, railroad boxes are waiting more than six days to board a train,” said Gene Seroka, executive director of the Port of Los Angeles. “That’s triple the dwell time compared to pre-pandemic days. Rail volume has increased six-fold since February. We need more rail assets in place at America’s busiest port complex. It important that all stakeholders redouble their efforts to maximize rail freight out of our docks and into the domestic economy.”
BNSF and Union Pacific serve the Port of Los Angeles. BNSF has been embroiled in a labor dispute over its attendance policy for months. According to Greg Regan, chairman of the transportation trades department, AFL-CIO, about a thousand workers have quit since February. Union Pacific recently told the Surface Transportation Board that it has reached nearly halfway to its 2022 goal of hiring 1,400 new train crew members.
Continued congestion on the West Coast has increased trade flow to East Coast and Gulf ports. The Port of New York and New Jersey has benefited greatly from this trend.
“We are already seeing some load ahead of time with Asian manufacturers shipping goods early to ease projected port congestion,” explained Pervinder Johar, CEO of Blume Global. “Instead of going through west coast ports, more of these shipments are going to east coast ports, just shifting capacity issues from west to east. I think even though we’ve seen an improvement in the cargo flow from the country’s ports, it could be short-lived.”
While Savannah is green right now, expect a shift to yellow or even red. MarineTraffic says it’s seeing a backlog of waiting ships off Savannah, indicating demand is shifting east.
“In the week of May 9, the port welcomed an average of two container ships, which equates to a capacity of 20,000 containers on hold,” said Alex Charvalias, managing director of MarineTraffic. “During the week of May 16, there were an average of 13 container ships, which equates to more than 100,000 containers on hold. Given this significant increase in containers on hold from week to week , we estimate that port wait times will increase by 100% to an average of three days or more.”
CNBC Supply Chain Heat Map data providers are global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; the logistics provider OL USA; the FreightWaves supply chain intelligence platform; the Blume Global supply chain platform; third-party logistics provider Orient Star Group; the marine analysis company MarineTraffic; marine visibility data company Project44; shipping data company MDS Transmodal UK; sea and air freight benchmarking an analytics company Xeneta, a leading provider of research and analysis, data services and consulting services within the global Sea-Intelligence ApS supply chain industry ; and air and freight logistics provider SEKO Logistics.