Port congestion remains a huge hurdle for the U.S. supply chain as billions of dollars of products are at anchor or landlocked, and a shift from West Coast ports to East Coast ports is creating new pressures and a series of chokepoints in the system. Millions of U.S. businesses are panicking with the extended shipping delays, soaring costs of materials and commodities, and spiking shipping rates amid a drastic sales slowdown. Consumers are about to get shocked by the coming wave of price increases as grocers and retailers announce plans to raise costs of essential goods up to 30 percent. The current outlook is extremely gloomy, and industry giants are telling us to brace for some serious shockwaves as peak shipping season begins for volatile supply chains.
In a repeat of 2021’s supply chain chaos, U.S. ports are now handling a deluge of imports while hundreds of ships are still waiting offshore and thousands upon thousands of empty containers are piling up everywhere, worsening congestion at both coasts. The record volume of imports – which is also clogging up other key US container ports such as Los Angeles and Savannah, Georgia – is one of the main reasons why logistics experts remain cautious about the state of the US supply chain. With capacity still tight, there’s no room for error in the system. But new problems continue to surface very quickly, resulting in severe disruptions and causing shippers a lot of pain.
The offshore traffic jam is once again as bad as it’s ever been. As more container ships from China continue to arrive at the U.S. coast, it is estimated that the number of waiting vessels reached 201 on Monday. Delivery delays can easily become a financial burden to many shippers. Time is money, and a vessel or container at rest takes both out of the supply chain. “Global shippers should be prepared for volatility in the coming quarters,” warned Peter Sand, chief shipping analyst at ocean and air freight research firm Xeneta. With disruptions and uncertainty sweeping across every facet of the worldwide supply chain, the vast majority of companies are in panic mode, and executives expect current conditions to continue or even worsen by the end of the year, a new report shows.
A fresh study by QIMA, a global quality control, and compliance service provider, uncovered that nearly two-thirds of global businesses with international supply chains see these disruptions remaining unchanged or worsening by the year’s end. That number jumps to 81 percent for U.S. firms. The study notes that U.S. companies are experiencing a broad array of issues. But of course, these problems are not only causing shortages. For grocers and food retailers, they mean that food inflation is set to hit between 15 and 20% this year. When supply chains get choked up like that and farmers can’t make ends meet, food becomes expensive, fast.
This summer, Kraft Heinz announced plans to hike prices by as much as 30%, and other companies are expected to follow the same move while U.S. consumers cope with rising costs for housing, energy, and more. The issues we are seeing now reveal that most businesses are not adequately ready to cushion against the global supply shocks. Unfortunately, there’s no going back from the extensive disruptions we’ve seen so far, and U.S. companies are bracing for more shockwaves as the situation at ports aggravates. The supply chain breakdown is set to reach catastrophic levels during this peak shipping season, and the distortions we’re witnessing right now are just a hit of what’s coming next.
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