Delays at two US ports – Long Beach and Los Angeles – could hold up shipments worth as much as $90bn ahead of Christmas, should the disruption continue into October, according to risk modelling firm Russell Group.
Disruptions at the ports and supply chain delays began when Covid-19 safety measures combined with a surge in demand to create a “perfect storm”, the company said.
“The disruptions at Long Beach and Los Angeles ports are a continued extension of the disruptions we saw at the end of 2020… Ships are delayed entering the ports, creating a backlog of ships waiting to enter the port, resulting in time lags for the unloading of goods,” said managing director of Russell Group Suki Basi. This could threaten the supply of goods around the US holiday season, he added.
Under a worst-case scenario, more than $90bn of trade, which includes over $6bn-worth of clothing, will be disrupted if delays continue at both ports into October, according to the analysis. Even a more modest scenario, with port delays only disrupted to the end of September, would see $49bn-worth of trade disrupted.
Mr Basi said the delays are not confined to the two US ports, with all containerships facing an increase in processing time at port. “[It] is happening across the global economy, from Rotterdam to Ningbo,” he said.
“What this modelling from Russell’s Scenario Factory demonstrates is that any effective risk mitigation plan needs to have a more granular understanding of trading relationships,” Mr Basi said. “Organisations, along with their risk managers, can analyse data from these modelling insights to plan for the worst and exploit any business opportunities that arise along the way.”