Ramifications loom for supply chains as more than 60 container ships were backlogged this week as they waited to dock and unload goods off of the coast of California.
Ports in California are heavily backlogged as record-breaking numbers of ships have waited to dock and unload cargo this week. As of September 22, 62 cargo ships were waiting to dock in both Los Angeles and Long Beach. Ships are waiting an average of ten days to dock and unload goods.
On September 22, ports in both Los Angeles and Long Beach reported more than 150 ships docked in port which included 95 container ships. The number of ships docked Wednesday was more than double that of pre-pandemic averages when the ports typically dealt with 60-70 ships at once.
The backlog of ships further stresses supply chains as the 10-day wait periods create a shortage of cargo ships for new shipments. Before the pandemic, the typical number of ships waiting to dock was “between zero and one,” Executive Director of the Marine Exchange of Southern California Kip Louttit told Business Insider in July.
The backlog of ships poses to further cripple supply chains ahead of the holiday season as inflated prices and a shortage of goods loom. The demand for shipping has caused prices to go up. “Some suppliers are… paying two to six times for containers and shipping,” Costco Chief Financial Officer and Executive Vice President Richard A. Galanti explained in a conference call with analysts September 23.
Galanti added that the company has been experiencing significant delays on shipments including furniture, children’s toys, seasonal items, and chips that are critical to electronic devices like “computers, tablets, video games,” and other “major appliances.” Shipments that normally took 8 to 12 weeks now take 16 to 18 weeks Galanti noted.
The effects of the backlog are far-reaching and have impacted other facets of supply chains Galanti noted:
From a supply chain perspective, the factors pressuring supply chains and inflation include port delays, container shortages, COVID disruptions, shortages on various components, raw materials and ingredients, labor cost pressures and trucker and driver shortages — trucks and driver shortages. Domestically, anecdotally rather from a — even on a domestic side, various major brands are requesting longer lead times. Some cases difficulty in finding drivers and trucks on short notice. Lead times on ingredients and packaging have been extended in some cases.
The Costco CFO said the company is selling out of merchandise within two weeks after it is received and that the company has been ordering “more and earlier,” to combat lengthy shipping times.
Galanti announced Costco is imposing consumer limitations on purchases of household items such as toilet paper, paper towels, and Kirkland brand bottled water amid supply chain complications.