Logjam

Early in the pandemic there was an expectation of reduced demand while at the same time factories in the Pacific Rim region were shut down because of Covid-19 quarantines and infections. In response, shipping companies cut their schedules in anticipation of a drop in demand for moving goods around the world.

Meanwhile in western countries, especially the United States, the timing and quantity of consumer purchases swamped the supply chain system. Factories whose production tends to be fairly predictable ramped up to satisfy a surge of orders. But the problem is the ability to obtain needed materials and the timing as the delivery system tattered on the edge of disaster. Shortages beget more shortages. A paint manufacturer that needs 27 chemicals to make its products may be able to buy all but one, but that one — perhaps stuck on a container ship off Southern California — may be enough to halt production.

What happened to all the giant container ships? In simplest terms, they got stuck in the wrong places. In the first phase of the pandemic, as China shipped huge volumes of protective gear like masks and hospital gowns all over the world, containers were unloaded in places that generally do not send much product back to China — regions like West Africa and South Asia. In those places, empty containers piled up just as Chinese factories were producing a mighty surge of other goods destined for wealthy markets in North America and Europe.

Because containers were scarce and demand for shipping intense, the cost of moving cargo skyrocketed. Before the pandemic, sending a container from Shanghai to Los Angeles cost perhaps $2,000. By early 2021, the same journey was fetching as much as $25,000. And many containers were getting bumped off ships and forced to wait, adding to delays throughout the supply chain. Even huge companies like Target and Home Depot had to wait for weeks and even months to get their finished factory wares onto ships.

Meanwhile, at ports in North America and Europe, where containers were arriving, the heavy influx of ships overwhelmed the availability of docks. At ports like Los Angeles and Oakland, Calif., dozens of ships were forced to anchor out in the ocean for days before they could load and unload. At the same time, truck drivers and dockworkers were stuck in quarantine, reducing the availability of people to unload goods and further slowing the process. This situation was worsened by the shutdown of the Suez Canal after a giant container ship got stuck there, and then by the closings of major ports in China in response to new Covid-19 cases.

Many companies responded to initial shortages by ordering extra items, adding to the strains on the ports and filling up warehouses. With warehouses full, containers — suddenly serving as storage areas — piled up at ports. The result was the mother of all traffic jams.


Peter S. Goodman, NY TImes online 10/22/2021

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