Ship Backup Shows Supply Chain Snarls

Number of the Day: The most relevant or interesting figure in personal finance

NOTD

Dotdash

That’s how many container ships were waiting to unload at the nation’s busiest seaport complex in Southern California on Friday, underscoring the supply chain logjam that’s contributing to inflation and declining retail sales.

Such cargo ship gridlock, as tracked by the Marine Exchange of Southern California, was unheard of before the pandemic, when typically there was at most a handful of ships at anchor waiting in line. The backup started building once the pandemic hit, reaching a peak of 109 ships on Jan. 9.  The figure includes vessels waiting at anchor near the port, as well as those bound for Southern California that are traveling slowly across the Pacific Ocean so they don’t hang out near the port and cause a maritime traffic jam there.

Economists cited supply chain bottlenecks such as the cargo situation as a reason that prices have been increasing so fast lately and that consumers bought less stuff in December, according to Friday’s report on retail sales from the government. After all, it’s hard to buy something if it’s stuck in the middle of the Pacific.

It was only in November that the port complex, which consists of the ports of Los Angeles and Long Beach, started incentivizing ships to slow their voyages instead of anchoring near the port. And only in December did the marine exchange begin including those slow ships in its daily count of backed-up vessels. That caused something of a hiccup for economists, who had previously measured the backup by counting only those ships in or near the port complex.

For example, Oxford Economics’ recently released supply chain stress tracker—an indicator of production and transportation backups in the economy—showed an improvement at the port complex in December. But it turned out to be an illusion because of how it was counting the backed-up ships.

“On the surface, it looks like the supply chain has gotten a little better,” said Oren Klachkin, lead U.S. economist at Oxford, noting that the real ship backup was much worse than its tracker suggested. “The total number waiting off port, not just 40 miles, is still high. Until that changes, the backlog will continue to get worse, overall."

Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.

Additional reporting by
Medora Lee
Medora Lee
Full Bio
Medora Lee began covering the financial markets in 1992 and has interviewed U.S. Treasury secretaries and CEOs of Fortune 500 companies. Her work at outlets including Reuters, theStreet.com, and Forbes.com schooled her in stocks, commodities, and bonds and now she translates Wall Street for Main Street at The Balance.
Learn about our editorial policies

Article Sources

  1. Marine Exchange of Southern California. “PacMMS Container Vessel Queuing Process Frequently Asked Questions.” Accessed Jan. 17, 2022.

  2. Oxford Economics. “Research Briefing, US: Supply Chain Remained Strained at Year End.” Accessed Jan. 17, 2022.