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The largest ports in the US are facing a record-breaking backlog of cargo ships, which altogether are carrying almost one million containers that are now stuck offshore. In the port of Los Angeles alone, nearly half a million 20-foot shipping containers – carrying 12 million metric tons of goods – are waiting for a berth along the port to dock and finally unload their massive cargo volume, according to data released by the Marine Exchange of Southern California. At the moment, the port has 19 mega-container ships waiting to dock, the largest of which is carrying roughly 20,000 20-foot shipping containers.
Along with the port of Long Beach, there are currently 90 container ships at the coast of California, 63 of which are still waiting off the shore, a number that largely exceeds the 2019 average of zero to one ship at anchor. Given the unprecedented congestion along the shore, some carriers have decided to relocate their ships to other ports. However, the situation is similarly chaotic at the ports of Savannah and New York. At least 24 ships are still waiting off of the Port of Savannah, an all-time record. And nine mega-ships are off the Port of New York City. The new volume arriving is rapidly overwhelming the facilities in both areas.
Nationwide, almost one million containers are now stuck outside US ports and waiting for a spot to dock and get unpacked. And this shocking number may escalate even further as more and more ships arrive to deliver holiday goods. On the other hand, waiting times at the port for these ships can extend for as long as a month and a half. This week, one vessel from Asia that had been waiting off the coast since September 5 was finally unloaded after more than 40 days of waiting – a problem experts warn will cause widespread shipping delays in the run-up for the holiday shopping season.
Of course, the U.S. is not the only country dealing with a massive backlog of containers. Over the weekend, Bloomberg reported that a series of new restrictions and shutdowns had created a “ripple effect” and pushed the prices of goods across the globe higher. Industry executives have warned that they now expect the shipping crisis to last until 2023. The supply chain bottlenecks are expected to create major issues for holiday shoppers, that’s why retail giants, such as Walmart, are now chartering their own vessels in an effort to beat the disruptions that threaten to jeopardize the retail sector’s make-or-break holiday season. Other big retailers, including Target, Home Depot, Costco, and Dollar Tree, have also said they will chartering ships to transport their goods during the holiday season. An extraordinary phenomenon that Steve Ferreira, the head of shipping consultancy Ocean Audit, has described as “Containergeddon.”
According to Burt Flickinger, the managing director at retail consultancy Strategic Resource Group, at least 25% of the goods stuck on ships are unlikely to make it onto shelves in time for the November 26 Black Friday, seen as the kickoff for the holiday shopping season, when retailers make more than a third of their profits. Another source in the shipping industry told Bloomberg that other firms were snapping up second-hand container vessels of all sizes. And while these big companies can afford to charter their own ships to get their goods in time, smaller companies can’t, which gives a huge advantage to the big corporative players at the expense of small businesses. Just take a moment to consider the economic implications of that and the imbalances created in our pricing system.
One giant shipping company in Japan is now looking to charter a ship for $130,000 a day for three years, which would have cost about $20,000 in 2020. One U.S. company decided to put up $35 million for the first nine months in cash, on day one. Another one of America’s largest big-box retailers just chartered a cargo ship for $80,000 a day for one year that would have cost about $10,000 a day a year ago, and, of course, small- and medium-sized businesses simply cannot compete with them and pay such absurd prices. But this also means that someone is going to pay for those increased transport costs. And who’s going to pay for all that? You are! We all are. The price of goods is going to explode in the coming months, and if that doesn’t scream inflation to you, you’re not paying attention. We’re on the verge of an inflationary spike that will stick around for years, and what we experienced so far was just a hint of the crisis that lies ahead.