U.S. West Coast ports have experienced at least three months of easing bottlenecks thanks to China's zero-COVID policies, locking down Shanghai, home to the world's busiest seaport, which slowed exports to the U.S. The reopening of Shanghai's economy and restarting of factories will undoubtedly spur an export wave of backlogged goods to the U.S., which could spark another round of congestion.
The lingering question is, when will this tsunami of goods, such as electronics, clothing, and whatever else China makes, flood U.S. ports? To answer that, Goldman Sachs analyst Jordan Alliger details in a new Tracking U.S. Supply Chain Congestion report that "July/August" could be the start of shipping congestion to reemerge after falling much of this year.
While recent improvements are encouraging, we still suspect that some portion is attributable to the temporary pause/slowdown in container ships coming from China -- and given the fact that the reopening in Shanghai only recently took hold, we still expect several weeks of easing before any potential goods influx. Said another way, June metrics will likely portend fewer bottlenecks while July/August could see some rearing up, especially if current longshore labor contract negotiations start to impact port productivity in tandem (note: the ILWU contract expires July 1st). -- Alliger
Besides Goldman, California port leaders warn China's reopening could swamp West Coast ports with pent-up and reignite congestion.
"We will have some form of a surge, given the delay of cargo volume from Shanghai and China overall.
"To what extent that surge will be remains to be seen," Mario Cordero, executive director of the Port of Long Beach, said on the sidelines of a Reuters Events logistics conference in Chicago.
The port in focus is the Los Angeles/Long Beach port complex, the largest in the Western Hemisphere. A flare-up in supply chain congestion just months before the U.S. midterm elections would be terrible optics for the Biden administration.
Readers may recall we've been anticipating the Chinese reopening and eventual swamping of U.S. West Coast ports. We detailed this in ""Bigger Mess Than Last Year" - Global Supply Chain Crisis Could Emerge By Summer" and "Calm Before The Storm? Transpacific Sea-Freight Rates Fall Amid China COVID Lockdowns."