Congestion in California leaves billions worth of cargo waiting outside USWC port, millions in inter

Congestion in California has caused billions of dollars worth of cargo to wait outside USWC ports, earning millions in interest, according to a report by a platform that provides supply chain visibility to shippers and logistics companies.

As of Jan. 7, data from the Ports of Los Angeles (POLA) and Long Beach (POLB) show that 103 ships expected to carry about 147,000 TEU in the two ports were either waiting within a 74-kilometer area or loitering, drifting , or sail slowly towards the port.

The delays in Los Angeles and Long Beach have had a major impact on the nation's economic growth, as California's two major ports handle roughly 40 percent of U.S. imports. Containers destined for unloading at the two ports are said to contain about $5.9 billion worth of cargo, according to project44.

"An estimated $238 billion worth of cargo experienced significant delays outside these ports between January 2021 and November 2021," the company noted.

The numbers help explain how port congestion pushes up cash register prices and how low interest rates allow companies to add additional inventory to their supply chains at low cost.

"The cost of holding more inventory is lower than you might expect with historically low interest rates," said Josh Brazil, vice president of supply chain insights at Project44, continuing to point out that while this low trade finance environment is a boon for shippers Helpful, it only exacerbates the congestion problem.

"While increasing inventories appears to be a good short-term solution, the industry also desperately needs more visibility, better cargo management and improvements in infrastructure and processes," Brazil added.

Port of Los Angeles data analyzed by Project44 shows that during 2021, an average of 540,255 TEUs are waiting outside the port per month, and an average of 377 container ships are waiting at anchor for berths per month.

The average cargo value is $40,000 per TEU, while financing costs are 3.2%, with shippers paying around $106 per TEU per month, according to Project44 and UK investment banking firm HSBC.

Given the average transit time between major Chinese ports and Los Angeles is 60 days, shippers pay an average of two months of interest on sea cargo.

Project44 explained: “This means that the total additional interest between January 2021 and November 2021 totals close to $321 million, which, while significant, represents a small fraction of the total cost of goods.”


Shipping time from Chinese ports to Los Angeles before the pandemic was 16 days + 6 days until customs clearance. Transit times have risen to around 60 days, based on the average number of days the port of Los Angeles spends waiting for a berth at 17.6 days, according to digital freight forwarding platform Shifl and the port.

With interest rates at historically low levels, companies can fund excess inventory and store it at sea for two months, and while this may not be entirely intentional, congestion helps companies avoid the cost of storing excess inventory.

“While shippers pay interest-related penalties for cargo stranded at sea, the cost is negligible compared to storing cargo on land,” commented a Project44 representative.

Financing costs did not stop after unloading, while import containers spent an average of 8 days in port, earning shippers millions of dollars in interest.

So, with the same low rate dynamic, shippers are able to absorb these costs at a relatively low cost, often passing these additional costs on to their customers.

According to Project44, shippers face a domino effect of shipping delays that exceed their forecasts. In particular, while shippers had anticipated shipping delays and placed orders as early as June and July 2021 to replenish inventories in time for the holiday shopping season, it was ultimately not enough as 103 ships were stranded with cargo (some of which must be On sale in December) to January 7th.

Continuous disruptions in the second half of the year, including multiple COVID-19 outbreaks, Yantian, Suez Canal and other incidents, have exacerbated supply chain bottlenecks.

“However, the holiday shopping season did meet consumer demand and even exceeded expectations,” the company added, “which leads us to believe that businesses are over-ordering items (given that a significant portion of it remains stuck in ports/surroundings) , which can be used to replenish depleted inventory or sold at discounted prices in the coming months.” Port congestion is expected to continue to impact the replenishment cycle this quarter.