The Rise of Texas

All ports are on the way to normalization after recovering from the aftermath of the logistics disruption caused by Corona.

More than 95% of the world’s imports and exports are transported by ocean. In addition, many of the products produced worldwide are transported by ships through ports. Therefore, the effect of the increase or decrease in port traffic on the global economy is very high. Among the World, The United States has the most significant number of ports globally, with 587.

In recent years, total U.S. container traffic has increased by 5.2% compared to the previous year. The Port of Houston has handled a total of 2.6 million TEUs, up 17% from last year’s record. Therefore, the port of Houston set another document for the terminal’s container throughput. However, as the increase increased, the residence time doubled as the port struggled to maintain speed. Therefore, an increase in Excessive Dwell Fee may occur for containers that stay in the terminal longer than the specified free time. Although port traffic has decreased due to Corona, container traffic has recently recovered to pre-Corona levels. However, issues may arise with this.

Ports across the United States continue to face headwinds ranging from increased dwell times for cargo ships and land bottlenecks to chassis shortages throughout the first half of 2022. The Port of Houston is mostly fully operational again, but the increase in the number of arrivals by cargo ships has led to much longer stays in recent months. In addition, shipping takes much time due to the rise in container loading has also exacerbated the logistical setback. Although global trade volume is increasing, the shortage of ships and empty containers is not resolved. In addition, as the loading and unloading time at the Port of Houston is gradually getting longer, logistical disruptions are occurring. The chassis is locked in a local warehouse and cannot accommodate inbound cargo—delayed inbound shipment and outbound empty containers. Considering the current supply and demand will be challenging to resolve for the time being.

However, if the throughput speed suddenly increases significantly, another problem arises. It’s an ever-increasing inventory. During the logistic disruption, to secure the quantity, the quantity of duplicate orders is released at once, resulting in a significant increase in stock. In addition, as the record-breaking inflation prolongs, consumption gradually decreases, increasing consumption’s contraction and creating an issue with inventory sales. If consumer sentiment, which has contracted due to inflation, does not recover, it may soon face a ” logistics disruption.”

Although the number of ship orders has increased significantly recently, it is not possible to increase the supply of ships in a short time because it takes a specific time to build. However, it is predicted that the peak season, when demand for consumer goods increases, such as Black Friday and Christmas, will be a limiting factor in resolving the logistical disruption. Although there is such timing in Q4, the industrial port market is expected to continue with limited available space and processing speed through the end of the year. Therefore, this year will still have a significant impact. In other words, recession, inflation, and supply chain problems will all lower growth expectations later this year and through 2023.

References

Margherita, B. (2022). Port of Houston mulls dwell measures to cope with record-breaking volumes. Port Technology. https://www.porttechnology.org/news/port-of-houston-mulls-dwell-measures-to-cope-with-record-breaking-volumes/

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