By Paul Benfer-
Alan Murphy of Sea Intelligence said on a Journal of Commerce webcast Tuesday that there is no end in sight to the port congestion issues in North America. He stated that “I don’t know when this will end and anyone that does shows how little they know.”
Mr. Murphy outlined a series or list of changes that will have to happen before the situation is normalized. The first of these is the end to the pandemic. Without that occurrence, North American ports will continue to struggle due to congestion. Below is his list of what is required for port normalization:
- U.S. pandemic needs to disappear or become manageable
- U.S. restrictions and limits on services need to return to normal
- U.S. government stimulus must return to normal
- U.S. retail and wholesale sales must return to their long-term trend
- Durable goods demand in the U.S. normalizes
- North American volumes slow down to their long-term trend
- Inland ports in the U.S. need to be unclogged
- Congestion induced delays subside
- U.S. retail inventories need to be filled to normal level
It was interesting to listen to each speaker’s view of port congestion. Sal Ferrigno of SSA Terminals mentioned the return of empty containers as a major issue. He suggested that warehouses and retailers were the real culprits causing the chassis shortage. Conversely, Jason Hilsenback, who manages drayage operations and operates a drayage website, said he believed the majority of containers sitting in warehouse yards were empty due to the difficulty in securing appointments to return containers. Anecdotally, I recently was in Southern California and spoke with a few warehousing, retailers and container freight station operators. All have empties piling up in their yards. Mike O’Malley of DCLI said forty foot container dwell times have more than doubled to ten days in Long Beach, which reinforces the obvious issue of chassis shortages. There appears to be a significant disconnect between Mr. Ferrigno’s view of the issue and what my contacts and Mr. Hilsenback currently experience. Other speakers mentioned extended free time as a culprit. Beth Rooney, Deputy Director of the Port Authority of New York and New Jersey, believes that aspect is significant contributor to congestion issue. Both Sal Ferrigno and John Petrino, Director, Business Development at Georgia Ports Authority, agreed with Ms. Rooney that extended free time is a major contributor to port congestion.
Now that the omicron variant has taken hold, it will be interesting to see it’s affect on government mandates in the U.S. and throughout the first world. If the new variant leads to more lockdowns, it is possible that the recent move towards more consumer spending on services will decrease again, which will prolong the port morass in the U.S., as people move back to more spending on durable goods.
As we continue to move forward and back with Covid restrictions, one thing becomes painfully obvious. Port congestion woes will continue until society learns to live with the virus.