U.S. Shipping Backups Shift to East Coast and Gulf Coast Ports

From Wall Street Journal:

By Paul Berger

U.S. importers seeking relief from bottlenecks at West Coast gateways are triggering new backups at East Coast and Gulf Coast ports, adding to strains on the country’s troubled supply chains.

Backups of dozens of container ships have formed off ports in New York, Houston and Savannah, Ga., authorities said, even as the lineup of vessels waiting to get into the neighboring ports of Los Angeles and Long Beach has dwindled from an armada that once counted more than 100 ships.

The queue at the Port of New York and New Jersey, the largest gateway on the East Coast, has reached about 20 vessels, while about 40 container ships were waiting recently off the coast’s second-largest gateway at the Port of Savannah. Port Houston, a growing destination for ships from Asia traveling through the Panama Canal, counted a backup of 25 container ships last week.

Industry executives and port officials said a surge in inbound cargo in recent months has swamped landside operations, straining storage capacity and the availability of container-handling equipment while slowing the ability of dockworkers and trucking companies to handle shipments.

“It’s a horror show,” said Lori Fellmer, chair of the ocean committee for the National Industrial Transportation League, which represents companies that ship commodities.

She said some container terminals are so crowded with boxes that truckers can’t get access to shipments and ocean carriers are charging shippers late fees for failing to pick up loaded containers and return empty boxes quickly enough.

Backups at the Port of Savannah first flared last fall and have resumed more recently.

An executive at a large forest-products company that ships materials to manufacturers from the East Coast said that because of the delays at the ports, the firm is increasingly using bulk vessels, which are less efficient than container ships, to move products out of the country. “It’s the worst I’ve ever seen it,” the executive said.

The new backups come as supply-chain congestion is growing again at ports around the world, worsening strains on global trade.

Last year, the ports of Los Angeles and Long Beach had chronic ocean backups, while other major U.S. ports had sporadic ones as imports surged by 20% when retailers rushed to restock inventories that were depleted early in the pandemic and demand for consumer goods boomed.

This year, cargo growth has slowed at the Southern California ports, the main U.S. gateway for goods imported from Asia, but volumes heading into the country through the East Coast and Gulf Coast have kept rising. Retailers and manufacturers are diverting goods to avoid the congestion on the West Coast, industry experts said, and as a hedge against possible work slowdowns as unionized West Coast dockworkers negotiate a labor contract with their employers.

During the first five months of 2022, the volume of loaded containers reaching the Port of New York and New Jersey rose 12% from the comparable period of 2021, according to research firm Beacon Economics, while inbound volume at Port Houston jumped 24% in that period. At Los Angeles and Long Beach, combined imports were up 0.5% in the January-May period.

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The influx has left the Port of New York and New Jersey clogged with about 200,000 empty containers waiting to be picked up by ocean carriers. “We are all handling far more than the entire supply chain can absorb,” said Bethann Rooney, the port’s director.

At the Houston port, import boxes are sitting an average of six to seven days—twice as long as usual—before being picked up and taken to warehouses for sorting and transport to stores, factories and distribution centers.

Port Houston Executive Director Roger Guenther said the port last summer opened 100 extra acres of capacity. “But when boxes started doubling in dwell time, we ate that capacity up pretty quickly,” he said.

Every day, millions of sailors, truck drivers, longshoremen, warehouse workers and delivery drivers keep mountains of goods moving into stores and homes to meet consumers’ increasing expectations of convenience. But this complex movement of goods underpinning the global economy is far more vulnerable than many imagined. Photo illustration: Adele Morgan

The congestion is rippling through supply chains. Port cargo-handling terminals are so full they load and unload ships more slowly, causing backups at sea. On land, truckers can’t return empty boxes so their yards fill up with containers sitting atop trailers that are used to haul boxes.

Shipping-industry officials said they are trying to ease the bottlenecks. Officials at the Port of New York and New Jersey set up a temporary storage area for 110,000 empty containers. They are also considering charging ocean carriers for empty containers that spend too long at the port, but Ms. Rooney said the fee likely wouldn’t be effective until October.

Federal Maritime Commission Chairman Daniel Maffei said the solution to the bottlenecks is an increase in warehouse space and trucking capacity as well as reduced import volumes.

Shipping officials said a slowdown in cargoes may be on the horizon.

Late summer is usually a peak shipping season for U.S. ocean imports as retailers bring in goods for fall and winter holidays. But many importers ordered from suppliers in Asia and Europe early in 2022, fearing a repeat of last year’s port delays. Big retailers now are cutting back on orders after a slowdown in consumer spending on goods left them overstuffed with inventories.

“It’s going to remain tight, no doubt,” said Jochen Thewes, chief executive of Germany-based freight forwarder DB Schenker, adding, “But the trend seems to be rather softening, which helps to relieve the stress in the ports.”