Look out over the waters surrounding the ports of Los Angeles and Long Beach, which combined for a throughput of more than 17.3 million TEUs in 2020, and the cargo capacity problem is obvious. The long line of vessels sitting in the water, waiting to unburden their bellies of ocean containers is an ongoing story of freight constraints and frustration borne of coronavirus shutdowns, ramped up online ordering, and insufficient alternative capacity.
This congestion has also aggravated a growing scarcity of ocean containers. Beginning last year, ocean freight carriers started witnessing an alarming shortage of containers and a dearth of chassis, just as the holiday shopping season began. Due to a lack of available ocean freight containers, vessels that are not fully laden with cargo now frequently travel from Asia to Europe and the United States.
With the decline in air cargo availability, ocean shippers used to shifting their capacity to the skies were left competing for insufficient supplies of ocean containers. In some cases, the lack of containers in southeast Asia meant that cargo couldn’t even begin the voyage across the East China Sea. Not to mention that reports in American Shipper and elsewhere have found that more than 2,500 containers have been lost at sea since November, and ocean carriers are speeding empty containers back to Asia to benefit from more lucrative contracts instead of shipping U.S. exports on the return leg. Capacity is constrained across the board, and there’s no easy solution to relieve cargo bottlenecks and get goods moving once again.
In a sign that congestion in Los Angeles and Long Beach won’t clear up anytime soon, CMA CGM has announced a new service calling at the Port of Oakland starting February 12, but congestion has already begun picking up there as well. It’s also been reported that the Federal Maritime Commission has suggested ocean carriers look to the Pacific Northwest as a landing spot for cargo originally destined for the Los Angeles area; if carriers pursue the new route, cargo might have an easier time making it on land, but then the dray leg of the journey will certainly become an issue.
How Digitizing Supply Chain Processes Can Help
There are options for supply chain stakeholders looking to digitization and end-to-end supply chain execution and visibility solutions to help ease the pressure caused by the current ocean cargo capacity crunch. As ports take in hundreds of thousands of containers a month, shippers and third-party logistics providers (3PLs) may have little awareness of where their containers are in the port pipeline or when they will be unloaded and released. This can further impact lead times and make it difficult to schedule onward manufacturing, transportation, and distribution. Unless there is a proactive approach to increase visibility into port and container operations, and the ability to respond to challenges by rerouting cargo or choosing alternative shipping methods when available, shippers can’t plan effectively or meet delivery-date commitments.
When a shipper digitizes and automates manual supply chain processes it provides benefits to the entire supply chain ecosystem. A digitized logistics world runs more efficiently and effectively. Port authorities and terminals that are suddenly able to better collaborate with one another and third parties, exchanging data freely, see suspended bookings dwindle and cargo congestion dissipate. Ports gain efficiency and insight to reduce the time containers stay in the ports, enabling them to, ultimately, increase the frequency of ship calls and serve end customers more efficiently. Most port terminals will communicate with supply chain platforms through logistics technology; there are currently solutions that allow terminals to expedite cargo movement, increase efficiency and throughput volumes, and provide innovative, high-value and differentiated services for marine terminals.
A strong supply chain technology solution promotes further integrations with marine terminals; provides container availability for import shipments; and extends with execution and visibility solutions beyond the port for true end-to-end supply chain orchestration.
It may be difficult to implement currently, but digitization, automated exception handling and the true visibility with accurate ETAs that come from a steady stream of clean, detailed data points really can solve supply chain bottlenecks. When machine learning enters the picture, a shipper’s digitized processes become truly autonomous, learning from historical routings and information the best option in each disruptive scenario. With that information, shippers and 3PLs can work with carriers to create new plans to react to today’s and tomorrow’s challenges. To plan for the next capacity crisis and significantly improve normal operations, look for a supply chain technology provider that has the data and decision-making solutions needed to get cargo flowing again.
Glenn Jones is global vice president of product strategy and marketing for Blume Global. He has a proven track record of growing businesses by building and leading R&D and product marketing organizations to define, develop, position and sell highly innovative and high value enterprise solutions delivered in the cloud. He was formerly the COO of Sweetbridge, the CTO of Steelwedge Software and also held leadership positions at other supply chain software companies including Elementum, E2Open and i2 Technologies.