With relentless shopping and unprecedented demand for goods, American consumers broke the supply chain in 2021, causing a surge of imports that flowed into the nation’s ports and resulted in logjams, delays and shortages.
In total, the nation’s nine biggest ports handled a record 50.5 million shipping containers, as measured by twenty-foot equivalent units, or TEUs, in 2021, an increase in total container volume of 16% over 2020, data collected by MarketWatch show.
Pent up consumer demand and stimulus money were unleashed by American shoppers, who shifted away from services to goods during the pandemic amid an accelerated reliance on e-commerce over brick-and-mortar shopping.
At the nation’s nine biggest ports, imported shipping containers loaded with goods increased last year by more than 17% from 2020 and 20% from 2019’s pre-pandemic levels.
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 December 2021.
Nathan Strang, director of ocean trade lane management at Flexport, a freight forwarding company, said the staggering increase in imports put a strain on a rigid supply chain.
“We can import faster than we can keep up with the imports,” said Strang. “The ships already weren’t running full, so shipping lines are going to dump more capacity into the system very quickly.”
Supply chain infrastructure within the U.S. — port terminals, trucking and warehousing — struggled to manage the flood of imported shipping containers, as images of idling container ships anchored just off the Southern California ports became a feature of 2021, as those ships waited for their turn to unload cargo.
Still, data from the last months of 2021 show the situation at the nation’s ports remain dynamic. The number of TEUs imported into the two largest U.S. ports fell during the last four months of last year. For the prior eight months of 2021, imports had sharply increased.
Robert Novack, associate professor of supply chain management at Pennsylvania State University, points to the independence of operators at the nation’s ports as a problem. After the economy picked back up after the onset of the pandemic, it was hard to get workers like crane operators and drayage drivers back into their jobs, Novack said.
Novack added that not only were workers in short supply, but so were container chassis, the semi-trailers that are used to move containers from ports.
Strang also says the ability of the ports to import containers was impacted by labor shortages related to the surge of COVID-19 late in the fall of 2021, and vacation time around Thanksgiving, Christmas and New Year’s.
“If import demand remains high, if capacity, on the Transpacific especially, remains constrained, I think we’re going to see a 2022 that looks remarkably similar to 2021,” Strang said.
Loaded import shipping containers were just part of the story at the nation’s biggest ports last year. The total amount of empty containers exported from the nine largest U.S. ports soared in 2021, contributing to congestion at terminals and making it more difficult for U.S. exporters to get agricultural and other U.S. products to Asian markets.
In total, 14.6 million containers left the biggest U.S. ports empty in 2021, as measured by TEUs, up from 10.5 in 2020 and 10.4 in 2019. With the trip from Asia to the U.S. becoming extremely profitable for shippers, they increasingly rushed containers back empty.
There were so many empty containers being exported because container ship lines didn’t have an incentive to wait for them to be stuffed with U.S. goods, according to Novack.
“Even if they deadheaded back to China, they made so much money on the front haul coming here that it didn’t matter,” Novack said. “That’s why you see a lot of container imbalances at this point in time as well.”
Steve Wen, CEO of drayage management platform Dray Alliance, said he is concerned about empty export containers being the cause of falling imports at the ports of Los Angeles and Long Beach.
“There’s simply not enough space at the ports to unload more containers because empty containers are taking up space.” Wen said. This fuels a negative feedback loop that results in ships waiting outside of ports because it’s taking longer for empty containers to be processed.
Retailers are renting additional warehouse space to address hundreds of cargo ships waiting to enter U.S. ports, Wen said.
To address excess containers at ports, the Port of Los Angeles announced a plan to charge carriers for empty containers that stay at marine terminals for nine days or longer. This is in addition to an import dwell fee the Southern California hubs announced on October 25. Both of these measures have been delayed multiple times.
So how long are containers lingering at ports?
In San Pedro Bay, where the Ports of Los Angeles and Long Beach are located, the time containers sit at terminals has become unusually long. The average dwell time before the pandemic was under five days. That average rose to 7.8 days in December, slightly lower than the recorded high of 8.4 days in November.
Steps have been taken to address congestion; however, most are short-term solutions.
In October, the Biden administration announced that the two largest ports would operate 24/7.
Steve Tracey, executive director for the Center for Supply Chain Research at Pennsylvania State University, said this move speeds up only one very tiny part of the supply chain.
“You can’t really speed up container ships, you can’t speed up trucks over the road, you can’t speed up the rail lines, so the only thing you can do is add more of them.”
Because of increased capacity to the system, Tracey sees the supply chain achieving a new equilibrium that’s higher than before the pandemic, but he added that could be something that doesn’t happen until well into 2022 or 2023.