Carriers warn of supply chain chaos if cargo stacks up in ports

Carriers warn of supply chain chaos if cargo stacks up in ports

A series of issues, including store closures, lack of drivers, and a shortage of warehousing space, are forcing some shippers to leave their cargo uncollected at ports in the United States and Europe. Photo credit: Shutterstock.com.

Warning that the world’s supply chains would break down if ports become congested, the World Shipping Council (WSC) Tuesday urged local and national governments to support policies that ensure a fluid flow of cargo through container terminals.

“This is not business as usual,” the container shipping trade representative said in a statement that highlighted the importance of keeping goods moving amid tightening measures to combat the coronavirus disease 2019 (COVID-19).

With non-essential retail stores closed, warehousing staff shortages, and travel bans affecting trucking, forwarders and shippers are reporting regular bottlenecks at key container handling points, such as ocean terminals and border crossings. The WSC highlighted the growing concerns, noting the integrity of the international supply chain was dependent on the continuous flow of goods.

“In many parts of the world, backups at warehouses, shortages of truck drivers, and scheduled deliveries of goods that importers cannot sell are causing cargo owners to leave cargo at the ports,” the WSC said. “A delay or disruption in one part of the supply chain becomes a bottleneck and will trigger another delay or disruption elsewhere — ultimately affecting the movement of critical food and supplies.”

No place for everything

In Europe, there is growing urgency for shippers and their forwarders to come up with solutions to manage a wave of unneeded inventory that is now in transit and about to land at ports in the locked-down continent.

In the United States, container lines, ports, and forwarders have warned of congestion from imports piling up at marine terminals in the coming weeks if more US retailers and manufacturers fail to pick up containers. The reasons are varied — either because warehouses are full or closed due to not being deemed essential service providers responding to coronavirus, or because retailers have requested delayed deliveries at distribution centers. But the effect will be that ports could run out of places to store incoming shipments.

The Ocean Carrier Equipment Management Association (OCEMA) last week warned that the failure of cargo owners to pick up their import containers and return empties threatens port flow and the availability of chassis. “A major concern is inland equipment velocity. If not maintained, this alone can cause disruption of our intermodal networks. It is important for intermodal equipment to keep moving in order to maintain fluidity,” Jeff Lawrence, executive director of OCEMA, said in a statement. “Keeping distribution centers and warehouses open and turning intermodal equipment is essential in this effort.” 

The threat this kind of disruption poses “is the biggest we have ever seen,” said Jon Gold, vice president of supply chain at the National Retail Federation. “All the ports need to get stakeholders together to prepare. No one knows when this is going to end. But if we’re not talking as an industry about a way forward, we’re going to fail.” 

European freight stakeholders have similar worries. Concerned over storage costs as unwanted containers arrive, shipper and forwarder groups in Europe have called on carriers and terminals to exercise restraint before issuing detention and demurrage charges. 

Container shipping companies appear to be responding to customers and offering solutions, such as storage in transit, storage at origin, or holding cargo at transshipment hubs closer to markets where the products will be quicker to deliver once demand returns.

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler.