Ongoing conflicts at West Coast ports are creating a growing traffic jam in the distribution of cargo around the country, giving many companies a major headache regarding the timely fulfillment of orders. As the slowdown continues, many companies, and especially retailers, are turning to air freight as a solution to getting overdue shipments to the warehouse.
Retailers, of course, are experiencing difficulties more than others as the holiday season begins, which is their busiest time of the year. However, the media is not giving accurate information about what is actually happening. The ports have not stopped operating, but the rate of cargo handling through the locks has been severely reduced. According to preliminary estimates, cargo handling may decrease by 30%, resulting in a snowball effect in terms of delays. At the same time, the volume of containers transported did not decrease, while imports increased by six percent compared to the same month in 2013.
The main goal is also controversial: some industry leaders deny the fact that the growth rate has declined and believe it is due to a number of problems, including larger ships, huge cargo volumes, overall efficiency and capacity issues in the trucking sector. In fact, many experts say port congestion was inevitable this year. All of this is not preventing the demand for on-time delivery of goods, which will entail an increased reliance on air freight until the situation improves.
Major traffic jams at the ports of Los Angeles and Long Beach are causing significant delays in shipments, just in time for the holiday season. Erica Nochlin reports for CBS Los Angeles.
Retail store bosses are watching the developing situation with growing concern as the success of the holiday shopping season, which “officially” opens this week, could be due to the arrival of goods from Asia for many stores. At the same time, the air charter market is already paying dividends, helping to ensure that already overdue orders are finally delivered to their destinations. Different businesses depend to varying degrees on the ports that are currently impacted, but for many of them the current situation is becoming more critical by the day.
For example, Ann Taylor womenswear retailer Kay Krill, chief executive officer, said Nov. 6 that the company has no choice but to outsource some of its shipments to air freight for the holiday season;
“Sales in the first part of the quarter were negatively impacted by product delivery delays associated with the uncertain employment situation at West Coast ports, which was offset by the use of air freight late in the quarter.
Of course, air cargo volumes were growing in tandem with these events, and October saw more year-over-year growth than the previous month.
Some source material for this article courtesy of JOC