Port Traffic Jam Eases, Giving Faint Hope for Inflation

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That’s how many container ships were waiting to unload at the nation’s busiest port complex on Friday—33 fewer than a month earlier and one sign of improvement in the persistent supply chain bottlenecks that are contributing to inflation.

In pre-pandemic days, there was typically between zero and one container ship waiting to unload at the ports of Los Angeles and Long Beach in Southern California, which together handle about 40% of all shipping containers coming to the U.S.

That all changed in 2020 when disruptions from the pandemic and increased demand for goods led to a floating traffic jam of ships waiting to unload. By Jan. 9 the line had swelled to a record 109 ships, according to the Marine Exchange of Southern California, a nonprofit organization that monitors shipping traffic at the ports. Since then, however, the backup has been on a downward trend, giving economists reason for some extremely guarded optimism.

“The downtick is certainly a good sign, an indication that the light at the end of the tunnel is a bit closer,” Oren Klachkin, lead U.S. economist at Oxford Economics, said in an email. “But we’re still a long way from normal. And, I think it’s too early to tell whether congestion will continue easing.

Breaking up logjams like the one at the port complex is important, economists say. That’s because the logistical works being gummed up is a major reason for the rampant inflation we’ve been seeing lately, and the economy can’t get back to normal until the supply chain snarls are straightened out.

Part of the reason for the line getting shorter recently is that some ships are diverting to other ports, Klachkin said. However, he added, that doesn't make the downtick less meaningful.

“Businesses are finding ways to cope with delays, but there are still lots of backlogs in the system,” he said.

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Article Sources

  1. Los Angeles County Economic Development Corp. “Exports and Goods Movement - Los Angeles County Economic Development Corporation.” Accessed Feb. 14, 2022.

  2. Federal Reserve Bank of St. Louis. “Global Supply Chain Disruptions and Inflation During the COVID-19 Pandemic | St. Louis Fed.” Accessed Feb. 14, 2022.

  3. Oxford Economics. “Supply Chains Started the New Year Under Duress.” Accessed Feb. 14, 2022.