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January 29, 2015

Chinese New Year and Port Congestion: The Perfect Storm

What happens when you mix a looming shutdown of one of the largest exporters in the world along with a labor shortage at U.S. ports? You get the Perfect Storm of a catastrophic logistical mess!

Chinese New Year: Failing to Plan = Planning to Fail

We start reminding our customers in September (nearly 5 months prior to Chinese New Year (CNY)) to start planning appropriately for orders in the first few months of the New Year. It’s vital to plan ahead for Chinese New Year as nearly the entire country of China shuts down for 2 to 3 weeks. This means nothing will get shipped during that time – no matter how important! As the weeks lead up to Chinese New Year, space on cargo vessels gets tighter and tighter as companies large and small aim to ship their products out of China before CNY starts.  With cargo space already a premium shipping to the East Coast, a true logistical nightmare has already been occurring on the West Coast.


Port Congestion: A Combination of Labor and Chassis Shortage

Over the past several months, a labor dispute has amplified the port congestion due to the West Coast port workers and employers not agreeing to a labor contract, which is negotiated every 6 years. The last contract expired July 1, 2014. In addition to the labor crisis at the ports, a chassis shortage has negatively impacted the predicament. Chassis are used to connect to the truck cab and haul the container out of port.The West Coast has been experiencing vessel cancellations and re-routing of vessels, due to the absence of the Oakland port call. Those containers that are shipped to Oakland are experiencing a 1 to 2 week delay in getting goods delivered. Even the Los Angles, Tacoma, and Seattle ports are experiencing port congestion and delays of 4-7 days due to vessels not being able to dock at those ports. Once the containers are off-loaded, the cargo is still not moving efficiently out of the port.

The Wall Street Journal estimated that even if a labor deal is reached between the port workers and employers, it could be up to eight weeks before the ports go back to normal. Not only are manufacturers affected by the port congestion, but U.S. importers and exporters are experiencing the havoc of the perfect storm.

Alleviating the Storm Clouds

So how are we dealing with all of this and making sure our customers receive their product on time? Thankfully with over a decade of experience planning for CNY and by working closely with our Asia offices and freight forwarders, we have already pre-booked the majority of our shipments through February and March. Our Logistics Team is also ensuring we avoid those West Coast ports with the severe delays. 

Once in a lifetime events can create perfect storms from time to time.  As global manufacturers who manage a complex multinational supply chain, we rely on strategic planning, expedited logistics, inventory solutions, and a nimble logistics team to keep us up to date as conditions change by the minute!

Curious to see what actually happens at a U.S. port? Take a tour with a former East West Logistics Manager.

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Filed Under: Logistics, In the News, Supply Chain Management, Offshore Expertise