Companies Reeling From Supply Chain Congestion at US Ports

By Logan Wamsley

Shipping ports across the U.S. are experiencing levels of prolonged supply chain congestion that are unpresented in modern history, The Financial Times reports. In the past 12 months alone, nine of those months count among the top 10 busiest months of the past 25 years. The Long Beach port alone moved 907,000 containers in May, which was the highest level recorded since 1995. Savannah, Georgia, meanwhile, reported moving 5.3 million containers in the past 12 months, a 20% increase from the previous fiscal year.

Although these ports are equipped to handle seasonal periods of congestion, such period have never lasted longer than the typical holiday season. Now, it appears, high levels of congestion are quickly becoming a new normal that ports simply do not have the infrastructure to effectively manage it.

With substantial delays comes revenue loss, a lot of it, and manufacturers are feeling the strain. According to Honeywell International, last holiday season it saw a revenue hit of up to $200 million due to supply chain difficulties, almost all of which the result of supply chain difficulties. Proctor & Gamble, saw a tax burden of $1.9 billion in 2020 as a result of high commodity and freights costs. The situation has grown so dire that some companies have even taken to “over-ordering” large quantities of inventory in the hope that at least some will make it through.

However, although manufacturers are feeling the pressure, the consumer feels the impact most of all. Products ranging from electronics to groceries to gasoline to household products have seen surges in prices. According to the U.S. Bureau of Labor Statistics, consumer prices in June increased by 5.4% a year ago, which is a 13-year high that tops the 5% increase seen in May. Companies from General Mills to Kimberly-Clark (Kleenex) to Hasbro to Harley Davidson have announced price increases.

Obviously, these are decisions that no manufacturer takes solace in making, but often, especially in industries with thin profit margins, there is no choice but to do so. Without serious reformulation of the modern supply chain, levels of congestion — even as COVID-19 restrictions decline — will continue indefinitely.
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