Global Shipping Crisis: Managing Supply Chain Risk More Complicated as U.S. Imports Hit Record High

A somewhat positive short-term outlook for the American economy and continued strong consumer spending helped push U.S. container imports into new record territory in May 2022. The spike will likely make managing supply chain risk all the more complex especially when taking into account uncertainties stemming from the effects of inflation, COVID lockdowns in China and the Russia-Ukraine war.

According to global trade data from Descartes Datamyne, TEU shipments into the U.S. in May 2022 totaled 2,622,465, up 7% compared with the month before and eclipsing the 2.6 million TEU mark for the first time. When looked at against May 2021 and pre-pandemic May 2019, container import volumes were up 3% and 26% respectively. (See Figure 1).

Figure #1. U.S. Container Import Volume Year-over-Year Comparison

Ports Bracing for Peak Season

While U.S. inbound container volume surged, delays at major ports eased in May 2022 compared with the month before (Refer to Figure 2). For example, for Los Angeles – the busiest port in the United States – the average delay dropped to 9.3 days from 10.3 days in April. The trend was due to the ongoing China COVID lockdowns, vessels being redirected to less congested ports, and the fact that port operations have become more efficient at dealing with high-volume throughput. It should be noted, however, that prior to the supply chain crisis, wait times were generally in the low single digits.

But port authorities are seeing this as the calm before the storm. With peak season just around the corner, they are preparing for more congestion especially as the main Chinese industrial hub of Shanghai emerges from its pandemic restrictions and on expectations that U.S. economic sentiments will remain where it is currently. The West Coast could also experience choppier waters if the International Longshore and Warehouse Union cannot agree on a new contract by the July 1st deadline. All this will make managing supply chain risk much more complex.

Figure 2: Monthly Average Delays (in days) at Top 10 Ports

Port April May
LOS ANGELES10.3          9.3
LONG BEACH9.7          8.8
NEW YORK/NEW JERSEY14.7        13.6
SAVANNAH10.7        10.6
NORFOLK14.1        12.0
HOUSTON11.6        11.5
CHARLESTON13.4        10.6
OAKLAND13.8        11.8
SEATTLE11.5        11.4
TACOMA,WA11.4          8.3

Tips on Managing Supply Chain Risks

Managing supply chain risk effectively under current operating conditions are extremely challenging to say the least. But there are strategic moves that shippers and logistics providers can make now to mitigate future risk to keep their international business healthy and maintain a satisfied customer base. These moves include:

  1. Short Term: Optimize supply chains by shifting the movement of goods to less congested transport lanes and ports. According to Descartes Datamyne data, there has been a gradual shift away from the top 10 East and West Coast U.S. ports. In May, their share of total container volume stood at 85.1%, compared with 86.5% the previous month and 86.9% in May 2021.
  2. Long Term: Strengthen the resiliency of supply chains by sourcing for alternative suppliers. The idea here is to diversify your base of suppliers to multiple countries to lessen the risk of supply chain shocks, and to have alternative sources of good, parts and raw materials that feed into East and West Coast ports.

How Datamyne can Help Manage Supply Chain Risks

Descartes Datamyne delivers global trade intelligence with comprehensive, accurate, up-to-date, import and export information that helps companies save significant time in spotting supply and demand shifts, optimizing trade lanes, expanding into new markets and identifying new buyers and suppliers.

Datamyne features the world’s largest searchable trade database covering 230 markets across five continents. Gathered directly from official filings with customs agencies and trade ministries, including bills of lading, our data is detailed (down to company names and contact details), timely and authoritative.

Descartes software solutions include a landed cost tool to calculate the economic viability of importing from a range of markets. Our applications can also screen against multiple denied parties lists simultaneously to help ensure organizations are not doing business with entities named on official government watch lists.

This is an excerpt of an article originally posted in the Descartes Global Shipping Crisis Resource Center. If you are looking for how Datamyne’s Global Trade Data and Intelligence can help you, Contact Us.

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