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President Biden has pushed the nation’s major ports to operate around the clock, shipping companies are getting fined for containers lingering on port docks, trucking operations are desperately recruiting foreign drivers, and pop-up container yards are hastily being funded in preparation for the holiday season. But beneath the hand-wringing over labor shortages and rusty infrastructure, there is an incontrovertible fact: the current supply-chain chaos is driven by demand. Americans are buying more goods than ever before and the current resources along the supply chain can’t keep up with U.S. shoppers.
MarketWatch collected data from the nation’s nine largest ports that show, through September, the total container volume coming into and leaving the nation has increased by nearly 22% from one year ago, and over 16% from 2019. This amount of container traffic, as measured by twenty-foot equivalent units, or TEUs, is unprecedented. It is being propelled by the volume of imported containers coming into the United States, which have increased by 25% from 2020 and nearly 20% from two years ago. Many of the containers are being sent back empty.
To get a sense of the burden being placed on the supply chain, the nation’s nine largest ports have handled 37.9 million TEUs of container volume from January of this year through September, compared to 28.3 million of total TEU volume during the same period in 2016. In other words, the nation’s biggest ports are dealing with 34% more container volume than they were just five years ago.
The nine ports analyzed by MarketWatch are Los Angeles, Long Beach, New York and New Jersey, Georgia, Houston, Seattle and Tacoma, South Carolina, Oakland, and Virginia. The Bureau of Transportation identified these as the container ports that handled the most TEUs between January 2019 and September 2021.
“The technical explanation of what is actually happening doesn’t necessarily make for a very good headline. You get ships outside the harbor, anchors dragging pipelines, empty shelves, Christmas is canceled,” says David Shillingford, chief strategy officer of Everstream Analytics, a supply chain risk analytics company. “But what it really comes down to is Americans having more cash than they’ve had for a very long time, pent up demand, and just more demand than the supply chain is designed for—it’s more a demand problem than anything else.”
At the Port of Los Angeles and the Port of Long Beach on Wednesday, the historic bottleneck featured 84 container ships at anchor, mostly waiting for trucks to haul away enough containers to make space for the cargo idling offshore. According to the International Longshore & Warehouse Union, the total number of dockworkers at the Southern California ports has decreased slightly to 14,092 from 14,930 in April 2020. So while the flood of imports has swelled, the number of people available at the ports to handle the container volume is roughly the same.
Gene Seroka, the executive director of the Port of Los Angeles, said at a press conference this week that the average longshoreman at his port has been working six days per week since the pandemic began. At the same time, the American Trucking Associations recently estimated that the nation’s longstanding truck driver shortage, the difference between the current number of drivers and the optimal amount needed based on freight demand, will hit a historic high of just over 80,000 drivers this year. There is also evidence that long-haul truck drivers are underutilized due to the fragmented nature of the trucking industry and inefficient procedures at warehouses and distribution centers.
“We keep increasing the number of vessels and their capacity to ship containers across the pond, but we still have the same footprint on the other end receiving this cargo,” says Frank Ponce De Leon, a coast committeeman with the ILWU in Los Angeles. “There is a lack of trucks, there’s a lack of warehouse capacity, and rail infrastructure.”
The White House is scrambling, launching several initiatives in conjunction with the $1 trillion infrastructure law to deal with some of the supply-chain constraints. But it is unclear how quickly these fixes can help absorb the onslaught of imports headed to the U.S.
“It is this combination of unprecedented volumes . . . which none of us expect to go away, and different buying patterns that have really upset the global supply chain,” White House Port Envoy John Porcari said at an October press conference. “Every bit of the supply chain is stressed.”
