The picture that shows why Brexit is not to blame for Britain's shortages

·5 min read
Ships moored off LA and Long Beach in California this week - Tim Rue/Bloomberg
Ships moored off LA and Long Beach in California this week - Tim Rue/Bloomberg

Standing on the Pacific coast in California, a casual observer might find themselves thinking America had just severed close ties with its biggest trading partners.

Outside Los Angeles and Long Beach - the country's two biggest ports - a queue of container ships stretches to the horizon, waiting to dock and offload their wares.

But this clear evidence of a supply chain crisis has nothing to do with any Brexit-style rupture. Instead, it has been caused by global chaos as ports struggle to recover from Covid shutdowns and the world struggles with a massive shortage of lorry drivers.

The turmoil in America is linked directly to disruption in Britain which critics here are keen to blame on our departure from the European Union - despite clear evidence of the same issues not just in LA, but across the Continent as well.

“Britain is by no means alone in suffering these problems, there have been issues at Rotterdam, Hamburg and Antwerp, and we have not been so badly hit as some which have much bigger volumes going through them as containers hang around for longer,” says Richard Ballantyne, chief executive of the British Ports Association.

“This is not a Brexit issue - rather than the haulage problem - and it’s unfair to say that border controls resulting from leaving the EU are a cause of this.”

The Port of LA, known as ‘America’s Port’, is the biggest entry site in the US for overseas imports. Its (literal) next-door neighbour, the Port of Long Beach, is also struggling. Together, the pair operate 13 private container terminals and account for about a third of US sea imports.

The sites, both in Long Beach, LA, have been chockablock for months, with vessels waiting weeks just to make it to the docks.

As of Sunday, around 87 container ships were classed as inport, meaning they are within 40 miles at the two sites, according to the Marine Exchange of Southern California. About 60 of those were physically anchored, several at the docks themselves, and the rest adrift. The maritime NGO said the ports’ anchorages are “essentially full”.

The delays are part of an ongoing nightmare for US importers, which have suffered from a surge in the rate paid for shipping from East Asia over the past year.

According to Freightos, a Hong Kong-based company which tracks container prices, moving a forty-foot container from East Asia to the US West Coast costs about $16,000, roughly ten times the typical pre-pandemic rate. It broke $20,000 over the summer, but pressures have softened in the past few weeks.

More than 70pc of US goods arrive by sea, but a shortage of truck drivers means they are stuck in port. Delays getting containers on to trains mean containers cannot be quickly moved out by rail either.

Some delays are specific to the US. The country’s ports’ gates close for several hours most days, and it is closed on Sundays.

But on the Chinese side (as in Europe), ports operate all day, almost every day.

With Chinese manufacturing exports rebounding at a staggering pace over recent months, the imbalance that creates has become increasingly visible.

Toy companies have told parents to shop early for Christmas. Some goods, such as toilet paper, are already being rationed.

The International Monetary Fund pins the blame for the global ructions on Covid, which shut factories and ports around the world last year and intermittently even now, slashing trade volumes. Demand has roared back, but is poorly matched by production levels, while ships and containers are left in the wrong place.

“The world distribution of shipping containers became highly distorted during the pandemic, leaving many stranded off their usual routes,” said the IMF in its World Economic Outlook.

“Temporary disruptions (such as the closure of the Suez Canal, restrictions in ports in China’s Pearl River Delta following Covid-19 outbreaks, and congestion in the ports of Los Angeles and Long Beach) exacerbated delays in delivery times.”

Once a backlog builds in one area, it ripples up and down supply chains. A ship waiting off Los Angeles cannot return to China to pick up more goods. A factory closure in China in turn can leave a container stuck in a warehouse waiting for goods instead of shipping them back to the US.

Meanwhile American consumers are buying more than ever before, requiring more shipping containers and more lorries.

In the three months to June 2019, America’s consumers bought goods worth a total of $4.5 trillion, according to the Bureau of Economic Analysis. In the same period of this year households spent more than $5.5 trillion, a jump of almost one-quarter.

All the while the country is short of lorry drivers to service this demand. The American Trucking Associations’ has estimated that the country could be short of as many as 100,000 drivers by 2023.

Retailers are taking direct action to try to keep supplies flowing.

Some major retailers including Walmart, Target, Home Depot and Dollar Tree have chartered their own ships to sidestep the busiest terminals.

In desperation some shippers are looking at alternative ports including Portland, Oakland, Oxnard and San Diego.

Others are bringing goods in by air, which costs three times as much or even diverting ships to the East Coast to avoid the California logjam.

There are some signs that the outside pressure could abate, though not due to American efforts: congestion at Chinese ports has fallen sharply in recent weeks, while output from the Asia superpower’s factories had dropped amid power outages and the Golden Week national holiday.

Golden Week may have landed at a perfect time for the golden quarter. With China more or less in shutdown during the period, terminals have been able to play catch-up. Given it takes about three weeks for a container to travel from China to California, it should soon become clear whether the volume of containers slowed.

For now, though, the US queues remain - a testament to a problem that is washing up on the shores of the whole world, not just Brexit Britain.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting