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Supply and demand – More like cry and get slammed

Supply and Demand

With the holidays rapidly approaching, the supply chains across the world are being bogged down with cargo to fulfill the demand that’s overloading the system. However, in Southern California at the Los Angeles and Long Beach California, it wasn’t the holidays that had them crunched for time and space. It was the merry month of May in this not-so-average year of 2021, the Los Angeles port processed more than 1 million Twenty-foot Equivalent Units (also known as TEU’s).

 

That’s a lot. Let’s break that down a bit. 

In 114 years since this port was created, it broke records in this past May in the busiest month it has ever had. In 2020 alone, the port of Los Angeles had 644,136 TEU’s for furniture, 291,316 TEU’s for car parts, 2282,180 TEU’s for apparel, 226,631 TEU’s for Electronics, 175,553 TEU’s for paper products, 210,751 TEU’s for plastics, 193,986 TEU’s for exports like animals and animal feed, 123,691 TEU’s for soybeans, 94,542 TEU’s for scrap metal, and 90,878 for fabrics and cotton. That’s 2,333,664 TEU’s for these products and supplies for a whole year. The amount of TEU’s processed in one (1) month was over 1 million TEU’s. 

The port itself is expected to process over 20 million in the next year, with the surrounding ports only managing 7-8 million at best.

 

That’s a lot, folks. 

So why is this congestion happening if they can sort that much in a month? Some may wonder. It has a lot to do with how things are handled once the cargo ship reaches port. They are reaching the port stocked fuller than ever to make sure they travel as full as possible. This is where they are randomly sorted into sections rather than grouped together based on destination. Which, obviously, takes much longer to sort than it would if they were grouped together. 

When things were getting expensive, ocean carriers sold their truck trailers to leasing companies to cut costs. During this time, leasing companies didn’t have enough trailers to cover the demands. Not to mention there is also a shortage of rail cars available to carry these containers on trains. This mess starts creating lines, and the longer the lines, the longer it takes to get trains and trucks loaded and truckers and conductors can be waiting for hours to get their cargo in order to make their deliveries.

 

Overall, between e-commerce exploding and creating this high demand and along with the lack of people and things to carry the products, we get stuck with a supply and demand chain that makes us cry as we get slammed. 

This market has volatility that we haven’t seen before, especially for cargo coming to the US west coast. If you haven’t started planning for your holiday cargo schedule, it’s unfortunate to say we doubt your retail position will be healthy as the season passes. Cargo is already delayed and it’s going to be late if it’s not already well on the journey to shelves. Thankfully if you have a logistics partner like Edward J. Zarach & Associates, you already have an advantage. Our long-term partners are doing incredible things that amaze us every day. If you want to know how we can keep your cargo moving and help ensure your holiday inventory can get to the shelves, reach out to your Zarach representative and learn more.

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