Glance out at the ocean near the Port of Long Beach and the view may look different than it did earlier this year – where are all the cargo ships?
“At the ports over at LA Long Beach in Southern California at least, just in January of this year there were 109 ships waiting at anchor. Right now I think the latest number was six ships,” said Jessica Alvarenga, the manager of government affairs at the Pacific Merchant Shipping Association.
Earlier this year, cargo ships full of goods were waiting offshore for weeks due to a backlog at the ports. Now, that’s not the case.
The National Retail Federation said part of it is because retailers thought ahead this season.
“Retailers planned ahead looking at the busy holiday season, the peak shipping season. Part of their mitigation to avoid some of the congestion issues and their potential disruptions was to bring product in earlier than they normally would,” said Jonathan Gold, the VP for supply chain and customs policy at the National Retail Federation. He said peak shipping season is July through October, but many retailers bought products before that.
Another factor is consumer spending has shifted.
“We’ve definitely seen a reduction in online spending,” Alvarenga said.
“People are now spending more time, more money on traveling or to hotels, to restaurants, to travel,” said Christopher Tang, a professor at the UCLA Anderson School of Management. “Last year we had a demand problem, not enough supply. This year we have plenty of supply, not enough demand.”
Experts say many retailers have a lot of supply to sell.
The World Container Index shows the average price to ship a 40-foot container is about $3,400. Before the pandemic, that price averaged at $1,400 but reached as high as $10,000 during the pandemic.
“I think prices will level out with time,” Alvarenga said. As for in the future, Alvarenga said they don’t anticipate another instance of the backlogs we saw before as consumer trends shift.
“I wouldn't say that people are spending less than what they did before the pandemic. I think they’re just going back to normal spending trends,” she said.
However, Gold said we still have some parts of the supply chain to work out.
“We’re still facing some congestion issues at our ports. The ability to get containers actually out of the port and into the warehouse and out to the stores, some of those challenges are still persisting,” he said.