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Overcrowded Supply Chains Are a Real Problem Featured

Overcrowded Supply Chains Are a Real Problem "Colorful Dystopia #2"

When everything runs smoothly at our ports, companies will get their goods at the right time, logistics firms will adhere to their promises to the customers and buyers will get their items in a predictable, timely and reliable manner. Unfortunately, this is not always the case. In many instances, there are supply chain disruptions caused by overcrowding, weather problems, and geopolitical problems. When you add the global pandemic into the mix, things take a new turn for the worst. With all these challenges, consumers are expected to increase in the future. Also, the amount of goods being shipped from overseas, mainly China, is expected to grow.  With this increase in demand, there is a likelihood of port congestion.

Port congestion or overcrowding is largely caused by the arrival of ships at the port but cannot be loaded or unloaded due to the already full capacity of the port. Furthermore, vehicles or trucks that transfer items can wait for long hours for their turn to get a spot at the port. However, with the problems listed above, the well-laid plans are disrupted, and the entire shipping process is slowed. According to INTRIX, a company that analyzes and ranks the effects of traffic congestion and overcrowding, congestion is "the demand for road space exceeding supply" and the impact of this is broad and often complex. Overcrowding leads to obvious time losses for both the companies and drivers, with losses from hours wasted waiting to load amounting to millions of dollars annually globally. In the United States alone, the total cost of congestion hit over $60 billion this year alone, with the majority of the losses occurring in urban areas.

With the pandemic-led lockdowns that curtailed the movement of goods and services, the movement in ports was adversely affected. The pandemic has disturbed the demand and availability of goods but increased the container volumes as companies tried to meet the sudden spike in demand following the reopening of economies after the lockdowns. Supply chain companies are bearing the most burden as the shippers play a critical role in the global movement of goods and trade. However, this cost is often passed down to the cost of delay to shippers, which in turn raises freight rates. The cost of storage also increases as the movement of goods is hampered.

In many countries, the growth of imports in combination with lack of adequate investment in port and inland transport infrastructure has been the main cause for decreased reliability and the rising cost of the supply chain and logistics. With the port congestion and overcrowding now that the world is reopening, companies are looking for ways they can solve the problem, both in the short and long term. For example, the American shippers and ports are concerned with looking for viable alternatives to handle imports in containers from the Far East due to congestion in West and West Coast.

Many options can be used as alternatives to normal shipping to avoid overcrowding, mainly in ports. One of those is air freight. While this option is fast and often ensures timely delivery of items, it is expensive and can be between 7-10 times that of sea transport. This makes sea freight a choice for many companies. Companies can also use alternative ports that are less overcrowded. However, such ports are often constrained in terms of resources and capacity to handle a specific type of item. There is also the rail transport approach for inland delivery of goods. This method of transport has its bottlenecks. Although these measures can offer a short-term solution to the problems, they will not solve them entirely. The solution lies with governments reconciling demands for road use with the available supply.

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Scott Koegler

Scott Koegler is Executive Editor for PMG360. He is a technology writer and editor with 20+ years experience delivering high value content to readers and publishers. 

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