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2 Article Summary Article Title: Clogged Ports put fall Holiday Shipments in Doubt Source: Paris, C. (2022, August 17). Clogged ports put fall, holiday shipments in doubt . WSJ. https://www.wsj.com/articles/clogged-ports-put-fall-holiday-shipments-in-doubt- 11660737601 Link: https://www.wsj.com/articles/clogged-ports-put-fall-holiday-shipments-in-doubt- 11660737601 I. Central Idea: International seaports in the U.S. and the European regions struggle with congestion as cargo remains undelivered to their customers. The causes are pandemic as dockworkers went home to contain the spread of the virus, leading to a delay and explosion in shipping prices. Moreover, with the Russian invasion of Ukraine, sanctions impose shown the majority of Russian drivers leaving work, and strike by seaport employees. II. Facts/Background 1. Port Congestion Indicators a. According to information provided by Xeneta, the container volume on the East Coast has risen by 19% in the last three months compared to the same period in 2021. This has led to docking delays for incoming ships by five days in New York and Norfolk, with those in Savannah taking waiting seven days. b. As reported by Danish maritime data provider on Sea-Intelligence, there was a 9.3% increase in containers stuck in ships or terminals. This was a five times increase compared with a monthly average from a decade ago.

3 c. Global container capacity unavailability peaked at 13.8% in January compared to 4.5% in 2015, when a major crisis was witnessed. By August this year, it was still above 9%, indicating that the supply-chain crisis was here to stay for some times. 2. The Driver Shortage Crisis a. Russia's invasion of Ukraine led to sanctions being placed on Russia. With 15% of truck drivers being Russians, there was a driver shortage created by them leaving. Few have been replaced. b. In Los Angeles and Long Beach terminals, 33,000 containers are waiting to be loaded. Twenty-one thousand have stayed in the seaports for nine days or even more. A lack of drivers and engines causes this to move the containers to inland distribution centers like Chicago to create enough space at the ports. c. Customers are also not picking up their cargo as there are no adequate truck drivers to make the deliveries effective. 3. The Dockworkers Strike a. Many international seaports in European countries like U.K. and Germany are struggling with strikes of their employees, which has paralyzed operations in the ports. For instance, in the U.K., 1,900 at Felixstowe had planned to strike for eight days, which could extend to 14 days of delays for cargo. b. Strikes are also prominent in Los Angeles and Long Beach, prompting cargo owners to shift some shipments to East Coast ports such as New York. c. Shifting cargo to accessible ports creates pressure on the supply chain due to the strike by employees. The increase in prices and reliability is not guaranteed; a

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4 similar experience in 2015 when there was a month strike on West Coast that, even after its end, took six months to get normalcy and cargo clearance. 111. Reaction and Results 1. Due to the pandemic, the freights rate has shortened by three times as compared to durations before the pandemic. Moreover, since the start of the Russia-Ukraine war, freight rates have been doubling on the West Coast and East Coast. This determines the level of contracts between significant cargo owners and ocean carriers. 2. Although container costs have been reduced, there are still high as compared to previous years. The rate of inflation is still present and may stay for a while. "In terms of container costs, they are down from where they were. But they are still higher than they were a year ago, and a year ago was higher than the year before, so it's still inflated, and those costs are flowing through.” John Furner, CEO of Walmart 3. This year's net profits for the shipping industry are estimated at $270 billion. IV. Conclusion The pandemic paralyzed operations at the ports from which the shipping industry has not recovered. The Russia-Ukraine war led to sanctions on the country and Russian drivers leaving, creating a truck driver shortage of 15%. Dockworkers' strikes have also paralyzed operations. All these factors have led to delays and inflations, which may stay a year longer.

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