Year-End Inventory Emergency... Walmart Deploys Chartered Ships

Urgent Cargo Securing Amid Bottlenecks at US LA and Long Beach Ports
Manufacturing Supply Chain Crisis Worsened by China's Power Shortage

[Asia Economy Reporter Yujin Cho] Walmart, which used to bring in hundreds of 40-foot containers loaded with Chinese-made toys stacked high like Lego blocks to the Port of LA every year, has decided to deploy its own chartered ships and containers this year amid a global supply chain paralysis that has triggered an emergency in securing inventory. This decision comes from the judgment that relying on global shipping companies amid supply chain bottlenecks and labor shortages will not allow products to be placed on shelves in time.

U.S. home improvement materials company Home Depot has given up on docking its chartered ship at the Port of LA and decided to reroute to the Port of San Diego. A port official said, "Home Depot's situation is relatively better," adding, "Ships carrying large cargo that require gantry cranes capable of handling ultra-large container ships, like those for automobiles, are forced to reroute to other ports or East Coast ports reluctantly."

Ahead of the U.S. year-end shopping season, which officially begins with Black Friday (the day after Thanksgiving, November 26 this year), U.S. retailers are facing an emergency in securing inventory due to supply chain collapse.

With export and import volumes surging amid the COVID-19 economic recovery, logistics arteries are clogged due to port congestion, empty container supply issues, and labor shortages, worsening the situation as the year-end volume increases.

At the Ports of LA and Long Beach, which handle more than a quarter of U.S. imported cargo, about 60 ships carrying billions of dollars worth of imports are currently waiting offshore to dock. At terminals, tens of thousands of empty containers that have been unloaded are left abandoned, exacerbating the chaos.

The rapid recovery of the U.S. economy from the COVID-19 crisis has caused demand to surge, but labor shortages across all sectors involved in the global logistics network?including shipping companies, ports, truck, and rail transport?have become prolonged.

Jin Seroka, Executive Director of the Port of LA, said, "(The port bottleneck) is causing chaos akin to reducing a 10-lane highway to 5 lanes." Although the volume handled at the Port of LA has increased by 30% compared to last year, congestion is deepening due to supply chain collapse and port operation delays.

Distribution consulting firm Button Freezinjer stated, "Retailers earn more than one-third of their annual revenue during the year-end shopping season, but 20 to 25% of the products they need to sell remain stuck on container ships, unable to be unloaded."

Meanwhile, severe power shortages in China, the world's largest exporter, are damaging manufacturers' supply lines, intensifying the crisis. Louis Kuiz, Senior Researcher for Asia at Oxford Economics, said, "If power shortages and production cuts continue, it will affect export production and further worsen global supply chain problems."

The globally spreading Delta variant is also acting as a factor that worsens supply chain paralysis during the year-end shopping season. Factories in Southeast Asian countries such as Vietnam and Indonesia, where major manufacturing plants are concentrated, have stopped due to the spread of Delta, pouring cold water on industries striving to secure inventory. Bloomberg pointed out, "As supply fails to keep up with demand, a massive crisis that paralyzes the global economy due to COVID-19 could occur this year."

This content was produced with the assistance of AI translation services.