Did you know global shipping is short on shipping containers… and it’s our fault? We Americans are importing more stuff, and apparently we’re so slow at handling those containers that shippers aren’t waiting for our producers to load those containers with exports; they can make more money shipping empties back to Asia to haul more imports bound for American consumers:
New analysis from Danish consultancy Sea-Intelligence shows just how much North America is to blame for the severe equipment imbalances challenging the global container shipping industry.
The continent’s comparatively slow handling of containers has long been a source of supply chain pain and a leading cause of empty container shortages in Asia, but never to the extent recorded today.
Before the pandemic North America was structurally responsible for 40-45% of the empty imbalance needed in Asia, according to analysis from Sea-Intelligence. Following the early pandemic volatility this changed sharply, so that North America is now structurally responsible for 55-60% of the imbalance in Asia.
…Latest data from PIERS, which tracks US imports and exports, shows container volumes from Asia to the US grew 90% in March compared to March 2020. Even when comparing March 2021’s figure to the pre-pandemic March 2019, the volume growth is up by a record 57% [Sam Chambers, “North America Responsible for the World’s Container Shortages,” Spalsh247.com, 2021.04.19].
Canadians are having trouble moving their legumes and lumber to the global market. The U.S. is losing dairy market share to New Zealand:
CoBank’s lead dairy economist [Tanner Ehmke] says the industry has been disproportionately impacted by container shortages when compared with other ag commodities.
“It’s getting hot, corn sitting in a hot container is not as big of a risk as say cheese or dry whey.”
…“Cheese exports are down, dry whey products have been up remarkably, but this is in the context of increased demand out of China—I’d say that’s been the anomaly,” he says. “Exports like nonfat dry milk started the year down as well.”
..At the same time, Ehmke says the U.S. is increasingly at a disadvantage to New Zealand who shipped a record number of dairy products to China in February.
“We’re going to see some potentially lost market share the longer this container issue plays out,” he says [Nicole Heslip, “Shipping Challenges Leaving Greater Impact on Dairy,” Brownfield Ag News, 2021.04.13].
The Journal of Commerce suggests the real problem is that we have too few robots and too many union-protected longshoremen:
A long history of toxic labor-management relations, particularly on the West Coast, has led to many of the issues at the heart of US container flow today. Huge cost increases, limited ability to automate terminals, chronic avoidable disruption during contract negotiations, and far lower productivity and working hours compared with ports in Asia and elsewhere around the world are at are core of the issue.
As just one example, for ship calls greater than 6,000 TEU, i.e. most mega-ship calls, it takes 24 seconds on average to move a container at Yangshan, Qingdao, and Yantian, versus or 48 seconds at Los Angeles — basically double the amount of time, according to an analysis of three years of IHS Markit Port Performance data.
Ocean Network Express CEO Jeremy Nixon told TPM21 that berths in Asia work ships 24/7, or 168 total hours per week. Ships are worked 16 hours per day or only 112 hours per week at LA-Long Beach, and terminal gates only operate 88 hours per week versus 24/7 operations in Asia.
“Most factories are working 24/7; the terminals in Asia are generally working 24/7. Unfortunately, as we get into North America, we don’t have that 24/7 working environment here. We create this bottleneck,” Nixon said. Consider an issue like detention and demurrage, a chronic flashpoint between carriers and terminal operators on one side, and shippers, forwarders and truckers on the other; how many of these issues arise or are made worse because of underlying issues of productivity and working hours?
Because of the politics that surrounds organized labor, it is a third rail when issues of US container throughput are addressed. Concerns exist, for example, whether automation will lead to slowdowns or other disruption during the upcoming 2022 West Coast negotiations [Peter Tirschwell, “US Port Congestion Solutions Bump into Third Rail of Labor,” Journal of Commerce, 2021.04.13].
Hey, I’m sure that if South Dakotans could help, we would. Maybe Governor Noem could convince President Biden to include more canals in the infrastructure plan. Dig a trench from Duluth to Big Stone City, make it possible for cargo ships to unload here in anti-union South Dakota. Or maybe we could just open a container-building factory in Sioux Falls, pre-pack our sea cans with South Dakota cheese, and send them out by rail….
Too many are tiny houses Cory.
Indeed Mark, just think about how in this “best wealthiest country in the world”, living in a discarded shipping container is “trending”.
You know Richard, its so true. My father was head of the IBEW in South Dakota, but worked for employees in Montana and North Dakota at all the dam sites, there’s a joke there. He kept his regular job as an electrical worker and did this for free. At his funeral in Highmore, near the dam of course, a hundred people came from Montana, and North Dakota. A person from Pierre talked to me and said that my dad had helped make it possible for him to send his two kids to college and for him to buy a house and said that my dad was truly for the working man. What has happened in South Dakota that they are afraid of unions and giving dignity to the working man?
grudznick is all for digging a big trench across hundreds of miles of Minnesota. But Mr. Pay is going to see some sort of environmental disaster looming in such an endeavor, I suspect.
The locks will be fun to watch from a distance as the big ships sit there, apparently on the prairie. But we need to prevent the near-certain visits by cruise lines. We do not want more visitors, just more stuff to be able to be shipped in and then take away the empty boxes.
Oh come on grudz, western So Dak should be a Buffalo park right? No Nowegian cruise line would come near So Dak, they wouldn’t allow the proper passport to be used.
Mark, in answer to your question “what has happened to S Dakota’s regard for the working man” I would say that lust for power and using that acquired power to enrich the big pockets of the ‘power-brokers’ is the primary reason!
And thus, the GOP party backed up by lobbyists’ manipulation of legislator efforts has created the situation. Works well, tho, for the top 5% of income in SD and the lobbyists…..
Not so much so for the bottom 90%.