Southern California Port Congestion Begins to Ease

The extended backlog of container ships waiting to unload at the Southern California ports of Los Angeles and Long Beach is finally shrinking. This marks the first indication in three months that U.S. supply-chain congestion may be easing at the nation’s busiest container port complex.

According to the Marine Exchange of Southern California, the number of container ships queuing to enter the ports dropped to 78 vessels on Tuesday, a significant decline from the peak of 109 ships recorded a month earlier.

Easing of Congestion: A Sign of Recovery?

Port officials remain cautious, noting that it is still unclear whether the decline signals the start of a long-term trend or if it is simply a temporary reduction caused by factory slowdowns in Asia during the Lunar New Year holiday, which began on February 1.

“No one is taking a victory lap,” said Gene Seroka, Executive Director of the Port of Los Angeles.

While the ship backup is at its lowest since November 11, the congestion at these ports remains severe by historical standards. Container ships continue to wait an average of 18 days to unload at the Port of Los Angeles, the busiest of the two neighboring gateways. Before the pandemic, it was rare for ships to wait for a berth.

Continuing Supply-Chain Bottlenecks and Their Impact

Supply-chain challenges persist, with logistics partners facing congestion not only at ports but also at inland rail terminals, warehouses, and distribution centers. These delays have contributed to inflation reaching a four-decade high, leading to shortages of consumer goods ranging from garage doors to paper cups.

Soren Skou, CEO of A.P. Moller-Maersk, stated that he expects these supply-chain bottlenecks to continue at least until June. The ongoing congestion underscores the difficulty of restoring the flow of goods in the aftermath of pandemic-induced disruptions.

Positive Signs for Logistics Operations

Despite the challenges, there are some encouraging signs that constraints on moving goods may be easing. A key factor is the gradual return of port workers after a New Year surge in absences caused by the Omicron variant of Covid-19. The Pacific Maritime Association reported a significant drop in daily Covid-19 cases among port-terminal workers, falling from 150 cases per day in January to 25 to 35 cases per day currently.

Additionally, container throughput at terminals is improving. Alan McCorkle, CEO of Yusen Terminals LLC at the Port of Los Angeles, reported a 55% increase in weekly throughput over the past two weeks. Containers are also moving more swiftly out of terminals by road and rail, contributing to faster movement of goods.

The Impact of the Lunar New Year and Canceled Sailings

The Lunar New Year holiday, which traditionally slows down production at factories in Asia, has provided some relief to U.S. ports. Many factories reduce their output as migrant workers return to their families for the holiday. This year, ocean carriers canceled 14% of sailings for February, compared to 8% last year, according to analysts at Citi Research.

Port leaders in Los Angeles and Long Beach are optimistic that the combination of reduced inbound volumes and improved worker availability will position them well for the upcoming peak holiday shipping season. They expect this season to begin earlier than usual this year, providing an opportunity to clear some of the backlog.

Long Road to Clearing the Ship Backup

However, industry experts remain cautious. Specialists at the Denmark-based marine consulting firm Sea-Intelligence ApS have warned that it could take eight to nine months to clear the ship backlog, even if port operations improve and run more efficiently. Niels Madsen, Vice President of Operations at Sea-Intelligence, expressed hesitation, stating, “For now, we believe it to be too early to say for sure that the critical bottleneck in U.S. supply chains is breaking.”

Conclusion

While the reduction in the number of ships waiting to unload at the Southern California ports is an encouraging sign, significant challenges remain for global logistics partners and shipping operators. With improvements in worker availability and terminal throughput, the situation is slowly improving. However, the supply-chain bottlenecks are far from over, and the road to recovery will likely take many months.