Before the coronavirus pandemic, the American consumer likely reached for a package of toilet paper on the supermarket shelf without a thought about how that product got there.
“People now understand how critical it is for us to get our goods. When we’re standing in line waiting to get toilet paper and paper towels, they now start to understand a little bit about the role the ports and everybody in the supply chain play in getting goods and actually where those goods are manufactured,” said Michele Grubbs, vice president of the Pacific Merchant Shipping Association.
Grubbs was a speaker in a webinar last week titled “How Will the New Normal Impact the Supply Chain?” put on by FuturePorts, an organization made up of members involved in the movement of goods in Southern California.
She said container volume at the ports of Los Angeles and Long Beach thus far in 2020 is down 13% from the same period in 2019.
“What happened very quickly is once we got our shelter-in-place, safer-at-home orders and we started to stay at home, the manufacturers, cargo owners, the retailers all quickly started canceling their orders. So what we see from [the week of May 11] through the end of July is that we’re going to have 43 blanked sailings. That is 43 vessels that were on a scheduled service to call at San Pedro Bay that will not be calling. So what we’re going to see is we will have a decline in volumes over the next two to three months,” Grubbs said.
A manufacturing shift out of China also could negatively impact West Coast ports.
“I think manufacturing is going to diversify. I think that we’ve started to see it with the impact of the trade wars and the tariffs. We started to see manufacturing moving toward Vietnam and even farther east, and I think that’s only going to continue. As the farther east it does go, that cargo would then come into the East Coast through the Suez Canal. That would impact some trade flows,” she said.
But Grubbs doesn’t believe that will happen anytime soon.
“China right now supplies 63% of all the imports into the U.S. That’s such a large, large amount of goods,” she said. “Remember, it’s China and it is a huge amount of cargo and it will take a long time to transition from there.”
Grubbs said consumers and cargo owners alike now want visibility into the supply chain.
“People want to know where their cargo is and I think that transparency — where the cargo is at all times — is only going to increase,” she said.
She also predicted collaboration seen during the height of the coronavirus pandemic will continue after the crisis wanes.
“I think you’re going to see increased cooperation between all the supply chain members. We saw it very quickly with the [International Longshore and Warehouse Union] and the terminal operators. We also saw it quickly between the cargo owners and the ocean carriers. They had to be communicating cooperatively and quickly with each other to cancel those orders for the shipping lines to be able to adjust their schedules as quickly as they have,” Grubbs said.
“I think also what we’re seeing is a lot more collaboration just on the transition of cargo,” she continued. “When we had a lot of empty containers here, there was a big effort to get those containers back to Asia and so they brought in extra loaders to do nothing but take those empties back so that they can be filled to be brought back here.
“And now we see there’s going to be some blanked sailings. We realize that’s going to displace some of the containers so there’s a lot more cooperation right now between terminals and warehouses and truckers just trying to figure out how we’re going to deal with that displacement of containers.”