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USA Multimodal Supply Chain Update April 2022

High demand for US shipments halts progress in clearing West Coast backlog

Following our North American Supply Chain Update and USA Advisory in March, increasing demand is adding to continued disruption across US supply chains.

With the backlogs prevalent across West and East Coast, positive news comes for US supply chains as 5G-resistant altimeters could help futureproof the air freight sector.

The US economy has seen a strong resurgence post-pandemic, with the unemployment rate bouncing back to the full employment level and labour force participation picking up as more workplaces return to 'normal' operations.

According to Deloitte, the adoption of technology during the pandemic has enabled accelerated labour productivity growth, with the US' productivity growth at around 2% up to the end of 2021 with an upward trend heading through the first quarter of 2022, which is expected to see it improve and grow faster than the economy in the UK and Europe.

Although the US economy has been impacted by the invasion of the Ukraine by the Russian government, growth has continued as the effects are far less severe when compared to Europe due to a much lower reliance on Russian exports.

See our detailed multimodal breakdown below.

Due to continued high demand for ocean freight on the West Coast, the port of Long Beach is currently experiencing delays on average between 36 and 42 days. The terminals at the port moved around 3.2% more cargo YoY in January compared to the same period in 2021.

The backlog is leading to cancelled sailings or for cargo to be rolled due to capacity over-allocation. Some sailings are also drifiting, causing bunched schedules and irregular sailing patterns for some destinations. It is unlikely that extra capacity will be employed to clear the disruption as this would only exacerbate the berthing delays.

The East Coast ports of Los Angeles and Oakland are also seeing disruption due to labour shortages, with vessel waiting times of up to 26 days and 15 days respectively. Although Seattle is not seeing long berthing delays, on-quay congestion is seeing boxes stored around 5 weeks before pickup, with operational delays of around a month.

Congestion along the East Coast is not at West Coast levels, however a shortage of labour coupled with high import volume is causing for vessel wait times of up to 16 days at the port of Charleston, South Carolina. Similar to the West Coast, this is resulting in rolled cargo and poor schedule integrity.

Houston's terminals are seeing wait times of up to 10 days, with labour shortages, high import volumes and severe weather affecting operations whilst handling 25% more cargo in January in comparison to the same period in 2021.

Air capacity continues to be tight to most destinations as passenger demand is increasing significantly. Therefore, cargo volume on passenger flights is being limited, causing some cargo-only airlines to implement additional surcharges due to the high demand and low capacity.

The 5G issues seen earlier in the year are close to a resolution, with an FAA Technical Standing Order (TSO) close to approval for a 5G-resistent altimeter. The proposed altimeter will be a direct replacement for the current unsuitable flight equipment and uses Digital Signal Processing to filter out the C-band 5G signals when flying in affected areas.

With approximately 71% of all internal US freight travelling by road in 2021, rising fuel costs are likely to have an impact across the majority of the US supply chain.

There is currently a high turnover rate for truck drivers, although with employment rates rising and labour force participation increasing many that left jobs during the pandemic are now returning to the industry with is expected to reduce the driver deficit in coming months.

Following strike action from members of the Teamsters Canada Rail Conference, as mentioned in our previous update, services on the Canadian rail network are now back underway after some disruption to US rail and ocean operations.

Some services to Jacksonville have been suspended until further notice following a crane fire in the area, impacting services routing via the area.

Rail car shortages and other restrictions are leading to severe congestion across Los Angeles and Long Beach terminals, causing delays of up to 16 days, whilst delays on the Chicago rail network are down to increased container dwell times, equipment shortages and gate restrictions.

US warehousing space and chassis equipment continue to become more and more scarce as shipments are delayed or cancelled across various ports.

If you are in need of warehousing and/or fulfilment in the USA, contact us about solutions through our growing hubs here.

 

For more information, please contact us here.

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