Port of Los Angeles (POLA) Executive Director Gene Seroka told local media that the supply chain problems which had crippled leading ports in the United States were relieved as the number of ships queuing outside of Southern California ports went down to the least number since last fall.
“The number of ships coming across the ocean, those that have just left, are traversing the Pacific or just about to get here to the ports of Long Beach and Los Angeles, counts at 83 today,” Seroka told Yahoo Finance on Tuesday, noting it was the least number since last fall.
According to the latest data from Marine Exchange of Southern California, 87 ships were in the POLA and the neighboring Port of Long Beach (POLB), including 28 at anchor or loitering and 59 at berths on Tuesday.
POLA and POLB together form the fifth busiest port facility in the world and the busiest in the Americas.
POLA processed about 10.7 million Twenty-Foot Equivalent Units (TEUs) in 2021, breaking its previous calendar year record by 13 percent and setting a new record in the Western Hemisphere. POLB reported that the calendar year 2021 volume of 9,384,368 TEUs went up 15.7 percent over the previous year, setting a new annual record as well.
Meanwhile, Seroka disclosed that the POLA can handle more cargo than ever before since 55 percent of the port’s truck gates and 30 percent of the rail capacity every day go unused currently.
It is a signal showing that the key point of the supply chain problem in the country is not the congestion of port right now, but the unseasonable expansion inventory which may be creating a feedback look with the logistics capacity and cost issues.
U.S. Logistics Managers’ Index (LMI) in January read as 71.9, which went up 1.8 from the last December’s rate and showed significant levels of inventory growth.
Researchers from the Colorado State University indicated in the monthly report of LMI that the excess inventory in the supply chain system could explain why some firms, such as those of apparel industry, are weighed down with inventory, and others such as grocery stores are facing shortages.
“Because capacity is low and costs are high, it is difficult to move inventory efficiently. This combination of low capacity and high costs likely led to over-ordering this past fall, and to goods idling at points in the supply chain where they could not be purchased by customers,” according to the latest report released on Feb. 1, which also explained that too much inventory eats up more capacity and makes costs to increase further.
“Essentially, low capacity and high costs led to higher levels of inventory, and now higher inventory is leading to even less capacity and higher costs. The result of this is that the high levels of inventory of durable goods in the supply chain is eating up capacity, and preventing high-turn inventories from moving as quickly as they need,” said the report.
The report also said that in a turn from the hot consumer market through much of 2021, U.S. spending went down 0.6 percent in December, and that was likely one of the drivers behind growing inventory levels.
The LMI, initiated in 2016, is a collaboration among Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University and University of Nevada, Reno, conducted in conjunction with the Council of Supply Chain Management Professionals.
The index measures key supply chain data from 100 upper-level industry managers in the country to analyze month-on-month changes in warehousing, transportation and inventory.
Seroka also told Bloomberg TV on Wednesday that U.S. supply chains had a chance to return to more normal operations after retailers replenish inventories in the next quarter.
“Most retailers continue to tell me they’ll use quarter two to replenish inventory, get that safety stock at a more comfortable level,” Seroka said. “Then we’ll have a chance if we hit these two marks properly to pivot into an earlier-than-normal peak season in early June or July.”
Source: Xinhua