Dive Brief:

• Shippers are thinking about diversifying the ports in their supply chain as a result of months of congestion in the market, FlexiVan CEO Ronald Widdows said during a TPM 2021 session this week when asked about potential disruption from International Longshore and Warehouse Union negotiations.
• "I know from some of the customers that we deal with, they're looking at a little bit greater use of Oakland, Seattle, through the Gulf, the U.S. East Coast," Widdows said.
• Widdows said the issues around congestion will be there "in some form or another, off and on during the year," noting that FlexiVan has retail customers who are still experiencing high levels of demand.

Dive Insight:

The congestion at the ports of Los Angeles and Long Beach has resulted in longer lead times in shippers' supply chains, as ships sit at anchor longer and containers remain at terminals for days. In an attempt to avoid these issues and keep supply chains flowing, shippers are examining calling at ports without congestion issues.

Switching ports is not always a simple task, according to Jason Totah, the president of Odyssey International Services. But larger retailers that already have their cargo split between different ports can more easily move volume as needed.

"So you see a big shift between Walmart and Target, on a percentage basis of their import, how they divert their cargo to which port because they have the ability and they have the infrastructure to handle any of the West Coast ports," Totah said in an interview earlier this year.

Walmart, for example, uses more than a dozen ports for its imports. Its busiest gateways are Houston and Seattle, according to figures from Panjiva for the 12 months up to June 30, 2020.

Switching cargo from southern California to the Northwest Seaport Alliance can especially make sense for inland-point intermodal moves to states like Ohio or Kentucky, he said, noting that the switch can be more difficult for cargo going to endpoints like Texas or Arkansas. The connection between the Northwest Seaport Alliance and the Midwest is well established, with 70% of cargo flowing through the ports traveling by rail to the Midwest, according to the Northwest Seaport Alliance.

"Our latest service offering positions BNSF as an important link for shippers who are seeking fast and reliable transit between the Pacific Northwest and the greater Northwest Ohio region," Todd Carter, BNSF’s vice president of domestic intermodal, said in a statement last year.

The Northwest Seaport Alliance announced a new service from CMA CGM last month, which the alliance described as "alleviating congestion in Southern California ports," Port of Seattle Commission President and NWSA Co-Chair Fred Felleman said in a statement.

Totah said he has been advising clients for the past several years to build more elastic supply chains that can switch between ports, if they can afford it.

For larger companies, switching ports is as easy as contacting a booking agent or freight forwarder and asking them to direct cargo to specific locations, Totah said. He suggested lead time should be one of the main KPIs to assess as companies consider making switches in their ports.

"And then you have to look at, 'Can I afford in my supply chain an extra week or two weeks of delays,'" he said. Cost is also a factor. If a couple weeks of delays aren't a problem, then shifting ports might not be worth the cost associated with the move. But if a factory is going to be shut down because the inventory doesn't arrive in time, a port switch could keep that from happening, he said.