Supply chain crisis at California ports could sink holiday gifts

One of the most severe supply-chain bottlenecks in recent history is impacting ports in both Northern and Southern California, and the end result could mean scarce and highly overpriced holiday gifts this year.

OAKLAND, Calif. - One of the most severe supply-chain bottlenecks in recent history is impacting ports in both Northern and Southern California, and the end result could mean scarce and highly overpriced holiday gifts this year.

A labor shortage and a pandemic-driven demand for merchandise has in recent weeks forced at least 80 ships to anchor and wait to unload everything from electronics and toys, to furniture and clothing at the twin ports of Los Angeles and Long Beach.

At the Port of Oakland, officials have strengthened the labor force, created additional jobs in recent months and installed four large cranes to handle increasing capacity. But there is a shortage of container ships coming north.

"I do not believe we’ve seen anything as severe as what we are seeing," said Port of Oakland Manager of Business Development Andrew Hwang. "We are looking to regain the services that we’ve lost over the last few months and help stabilize the current supply chain problems."

More than 20 months into the coronavirus pandemic, an online shopping surge continues to drive up the volume of products shipped to American ports. In usual times, ships would make stops at Southern California ports to unload then head to Oakland or other ports north to unload additional containers before beginning their return to Asia.

But with the intense demand to get more merchandise into the hands of Americans, some ships over the summer began bypassing Oakland and other West Coast ports, largely to save time.

In many ways, it has created a tale of two cities in California; where to the south there’s congestion including a massive ship back-up and a container stack-up. To the north, there are empty cranes, trucks and trains full staffed and ready to roll.

As a result, it is causing shipment delays, skyrocketing freight costs and limited space on-board ships.

Thousands of containers are stacking up at the southern California terminals resulting in a plan to issue fines to shipping companies if they allow cargo containers to remain at marine terminals for an extended number of days.

"Essentially we’ve given notice that gone are the days that these containers are just going to sit there for nine days or more," Port of Long Beach Director Mario Cordero said. "It’s a bold step that’s required in this crisis."

The ports will charge ocean carriers $100 fine per container per day until the cargo moves.

"That’s very problematic," Scott Taylor, CEO if GSC Logistics in Oakland said. "We personally don’t think punishing people is the right way to go. We would rather see collaboration."

Taylor said increasing costs are ultimately passed to consumers anyway and with the holidays approaching the supply chain will become even more constrained.

The worldwide backlog is expected to take many months or possibly a year before it’s smooth sailing again.

"We want to make sure that some of those ships come up to Oakland where we’re ready, willing and able to handle them," Taylor said.

MSC, the world’s second largest carrier will launch a weekly route to Oakland from Southeast Asia beginning November 7. And Ocean Network Express (ONE) will restore a route to Oakland on November 15.

Still, it may be too little too late to guarantee all gifts will end up under the tree for Christmas.

"If you see what you want to get for your friends and family and it’s reasonably priced, get it now," Hwang said. "We don’t know if there will be replenishment between now and Christmas."