The ongoing labor disputes at West Coast ports are causing a growing log jam in the national distribution of freight, an issue that is causing many businesses severe headaches in terms of getting orders fulfilled on time. As the apparent work slowdowns continue many companies and especially retailers are looking towards air freight as a solution to get overdue shipments into their inventory.
Retailers of course are feeling the pinch more than most as we head into the holiday season which is their busiest time of the year. The media haven't been very specific about what is actually happening however, operations at ports haven't ceased but the pace of cargo moving through the gateways has been severely affected with estimates that processing may be down by as much as 30% leading to a snowball effect in terms of delay. In conjunction with this the volume of shipped containers hasn't reduced with imports being up six percent versus the same month in 2013.
The root cause is being disputed too with some industry leaders denying that a slowdown is taking place and stating that the cause is a combination of issues including larger ships, record volumes of freight, overall efficiencies and a capacity issue in the trucking sector. The reality according to many experts is that port congestion this year was inevitable. All of which doesn't stop the demand for goods on time which will lead to an increased reliance on air freight shipment until the situation improves.
Extensive congestion at the ports of Los Angeles and Long Beach is causing major shipping delays, just in time for the holiday season. Erica Nochlin reports for CBS Los Angeles
Retail heads are watching the developing situation with increasing concern as the success of the holiday shopping season which 'officially' begins this week can hinge on the arrival of inventory from Asia for many stores. Meanwhile the air charter market is already seeing dividends in assisting already late orders to finally make their way to their destination. Different companies have varying degrees of reliance on the ports that are currently being impacted but the fluid situation grows more critical day by day for many.
For example women’s clothing retailer Ann Taylor CEO Kay Krill stated that the company had no alternative but to transfer some shipments to air freight for the holiday season, she stated on November 6;
“Sales during the first half of the quarter were negatively impacted by product shipment delays related to labor uncertainty at the West Coast ports, which were mitigated by the use of air freight later in the quarter,”
Naturally load volumes shipped via air freight have been increasing in tandem with these developments with October seeing far more pronounced year-over-year growth than the previous month.
Some source material for this article courtesy of JOC.com