The Covid pandemic has snaked its way all through the supply chain. Beginning with factory shutdowns a year ago, a domino effect has been triggered. Supply and demand are in a frequent state of imbalance. Historic freight rates and equipment shortages at the ports have wreaked chaos worldwide. Up to 400,000 workers have been stranded aboard cargo ships due to limitations preventing them from disembarking. Now, in the ports of Los Angeles and Long Beach—California’s hottest zone for the outbreak—at least 700 cases of Covid have been reported among the dockworkers there. And with that, a backlog of about 30 container ships are waiting to unload at port.

According to Lars Jensen from SeaIntel, the situation amounts to close to 300,000 TEUs waiting to get offloaded.

The outbreak comes on the heels of news that the country’s death toll from Covid cases has surpassed 400,000. And the number of new cases reported daily, worldwide, is accelerating—just as new variants are emerging.

On ships and at ports, social distancing can be challenging, given the working environments and conditions. When COVID cases are discovered onboard ships, crew members need to quarantine for 14 days on the vessel—effectively taking that ship out of rotation. As more people get sick and become sidelined, the shipping industry—already marked by slowdowns and massive equipment shortages—is expected to incur even more challenges around reliability and transit times.

Cascading Effect in Shipping Turmoil

“The backlog we’re seeing at the ports is due to a combination of forces,” notes Flexport Chief Operating Officer Sanne Manders. “On the one hand, we have a severe and unfortunate labor shortage, partly caused by Covid. And on the other, a 25% year-over-year uptick in consumer demand in Q4. The surge in goods being shipped is straining the infrastructure and leading to a massive traffic jam.”

Nerijus Poskus, Vice President of Ocean Freight explains, “It's all interconnected: Because of the port congestion and worker shortages, vessels are not going back to Asia on time. Same goes for empty equipment.” He adds, “Weeks later, carriers have to cancel some of the sailings from Asia because ships and empty containers are just not there.”

It’s likely that the current situation will extend well into 2021—possibly worsening after ships carrying pre-Chinese New Year orders arrive at the ports of Los Angeles and Long Beach.
With Covid weakening the threads of the supply chain, those responsible for helping businesses meet demand are being put through the wringer. A labor shortage is becoming even more dire. In fact, aside from the newly reported cases, hundreds more dockworkers are going on pandemic-related leaves.

All of this underscores the need to empower businesses to be able to see what is happening at any given time with their cargo, to allow for contingency plans. Supply chain partners with shared access to the same data and real-time status of shipments can collaborate far more effectively.

To see how trade lanes are impacted this week, check Freight Market Update. You can also learn more about ocean market predictions for 2021 at next week’s webinar.