Challenges across all shipping modes continue to increase
Ocean, air, intermodal and trucking shipping delays stemming from the COVID-19 pandemic continue to challenge domestic and international manufacturers. According to experts, delays are primarily due to two, compounding factors: substantially increased e-commerce purchases with so many people working from home and diminished port capacity due to workers impacted by coronavirus.
In January, nearly 700 Los Angeles dockworkers tested positive for COVID and were off the job. As a result, in early February, the Marine Exchange of Southern California reported 37 ships anchored off the Los Angeles and Long Beach port complex awaiting berths. A year ago, one ship awaited space.
More companies moving to air cargo and the urgent need for PPE around the work have driven up these costs as well. Online shipping marketplace Freightos reports that available air cargo space is 20 percent lower than this time last year and costs continue to rise. Likewise, intermodal shipping and trucking are seeing similar high demands.
The Journal of Commerce’s 2021 Annual Review and Outlook points to manufacturers reconsidering the importance of safety stock in their supply chains as a result of being unable to secure needed inventories. “Safety stock may increase inventory carrying costs, but that’s nothing compared with the potential cost of a stock-out.”
Even though February is traditionally one of the slowest shipping months, delays are expected to remain for the foreseeable future. This is because China encouraged workers to remain on the job during the Lunar New Year, rather than travel to their homes, to help stop the spread of COVID-19. As a result, some manufacturers remained open to keep up with demand from customers seeking to restock inventories.
The Journal of Commerce expects double-digit price increases from ocean carriers and U.S. trucking firms in spring 2021. The need to ship large quantities of COVID-19 vaccines around the world could further disrupt supply and raise prices even higher.