The director of one of the largest ports in the US warns the shipping industry is in 'crisis mode' as 66 cargo ships float off the California shore

·3 min read
Red arrows point to the dozens of cargo ships waiting outside the port of Los Angeles.
Cargo ships wait off the coast of California. Marine Exchange of Southern California
  • Port of Long Beach Executive Director Mario Cordero said the industry is in "crisis mode."

  • In September, backlogs at ports in Los Angeles and Long Beach broke multiple records.

  • The Port of Long Beach is working toward 24/7 operation, but it might not be enough.

  • See more stories on Insider's business page.

A historic backlog of cargo ships in Southern California has left the supply chain and shipping industry in a crisis, Mario Cordero, the executive director of the Port of Long Beach, warned this week.

Cordero, who oversees one of the busiest ports in the country, advised people to start holiday shopping as soon as possible due to the disruptions in the supply chain. The port will move about 20 million containers this year, more than ever before, Cordero told Fox Business. Consumers will definitely feel the pinch, as companies across the board - from raw materials to durable goods, electronics, furniture, and auto parts - have been hit with shortages and delays.

"The supply chain is definitely disrupted and has been for some time," Cordero told the outlet. "The situation is in a crisis mode."

Earlier this month, ports in Los Angeles and Long Beach broke multiple records for the number of ships in the locations, as well as the number of cargo ships waiting to dock. Since then, the number of vessels has trended slightly downward, but the ports maintain unprecedented levels of congestion. On Tuesday, the ports housed 144 ships - including 66 container ships waiting off the shore at anchor or in drift areas, according to data from the Marine Exchange of Southern California. Before the pandemic, the ports typically saw an average of zero to one ship waiting to dock, but now the ships wait weeks to unload.

The cargo on the ships currently at anchor in the California ports - which handle nearly half of all US imports - will likely not be seen until the end of October or November, Brian Whitlock, a senior director and research analyst for Gartner, said on LinkedIn.

Several tractor trailers wait to depart a port with shipping containers stacked behind them
California ports handle nearly half of US imports. Associated Press

To address the record delays, the Port of Long Beach moved this month to increase its hours of operation to 24 hours on Monday through Thursday. While the two ports in LA and Long Beach are often counted as one port due to their proximity, the slightly larger Port of Los Angeles did not follow suit, choosing instead to maintain its existing hours that do not include around-the-clock work.

Cordero said Long Beach plans to use its extended hours as a pilot program toward 24/7 operations - like many ports in Asia and Europe - but has been unable to do so thus far due to a shortage of workers across the industry, including dock workers, truckers, and warehouse workers.

The executive director of the Port of Los Angeles, Gene Seroka, told CNBC's "Squawk Box" on Tuesday that extending the port's hours of operation will do little to fix the issue. He said about 30% of truck appointments go unused every day because the port needs full coordination with trucking companies and warehouses.

"We've had longshore workers on the job six days a week since the pandemic started, but it's truck drivers and warehouse workers that we need to bolster," Seroka said.

The supply-chain snarls have already created shortages and price hikes across the country. On Sunday, Nike said it doesn't have enough sneakers to sell for the holidays. Last week, Costco announced a limit on the amount of toilet paper and packages of water shoppers could purchase.

Cordero told Fox Business he does not see consumer demand tapering until late next year as holiday demand, as well as companies' efforts to replenish inventory, continues to strain the global supply chain at a time when it is still combating COVID-19 shutdowns in Asia.

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