$24 Billion in Goods is Stuck Floating Outside Congested California Ports
October 27, 2021
Congestion at ports throughout the nation has led to delays and higher shipping costs, and unfortunately, the problem is expected to persist through much of 2022.
In a recent note to clients, Goldman Sachs warned that shipping backlogs are likely to persist until “at least” the middle of next year. Goldman Sachs estimates that there is a staggering $24 billion in goods carried by the dozens of container ships floating outside the ports in Los Angeles and Long Beach waiting to offload.
Even when ships do finally dock and unload, shortages of workers and truck drivers mean goods can sit unmoving for days. Goldman Sachs found that about one-third of the shipping containers at the ports of Los Angeles and Long Beach sat for more than five days after being unloaded from the ship. Prior to the pandemic, only low single-digit percentages would sit for that long.
Ongoing delays and increased shipping costs mean that U.S. consumers will be facing higher prices and fewer purchasing options until the situation is sorted. Consumer prices have been increasing at the fastest pace in more than a decade, and data from Adobe Analytics shows that the amount of products that were out of stock online is 172% higher than in January 2020, just before the pandemic began.
Goldman Sachs expects congestion to ease “slightly” in the coming months as ports work 24/7 and the U.S. moves past peak holiday shopping demand. So long as there are no further disruptions to the supply chain, such as Covid outbreaks, Goldman Sachs economists expect congestion to ease “more meaningfully” after the Chinese New Year in Febraury.