Port Congestion: Impact & Solutions for Businesses

Port Congestion in Logistics: How It Affects Your Business

Posted on:
Apr 30, 2024

You may never have considered the work organization in shipping ports, but your delivery flow depends on them extensively. Any delays or port congestion can have a domino effect on shipping lines, cargo handlers, your business, and sales. Is there anything business owners can do to reduce the risk of port congestion? Before anything else, let’s understand port congestion’s causes and possible effects.

What is port congestion?

Port congestion happens when vessels cannot dock in a port to unload and unload cargo. This situation occurs when the port reaches its maximum capacity and cannot serve the rest of the shippers.

Vessels and containers will then have to wait to be accommodated at the port. According to the IHS Market Port Performance Data, the average port waiting time doubled in 2021 due to the pandemic risks. The average anchoring time is 33 hours in May 2021 compared to 8 hours in 2019. Thus, port congestion issues significantly slow shipping operations and damage the supply chain process.

What causes port congestion?

According to statistics, nearly 70% of ports worldwide are experiencing a congestion problem. To resolve this issue, it’s essential to consider the most common reasons for heavy traffic in shipping ports.

  • Shortage of container trucks and trailers. Sometimes, ports face the problem of insufficient storage capacity, which leads to many carriers waiting too long to unload. Before transporting your freight, learn if there’s an opportunity to unload your cargo and locate it in an appropriate space.
  • The large volume of cargo and excess stock. Overstocking can lead to the port employees’ inability to process and send orders. Try to inform the partners about your freight volumes to know if it’s still reasonable to move them to this precise port.
  • Extreme weather conditions. Unpredictable weather causes severe logistics disruptions and extends the waiting time for an unknown length. Thus, it’s essential to consider weather forecasts when planning your shipment.
  • Shipping lines taking advantage of demurrage costs. Unreliable shipping services would be interested in maintaining the congestion state to charge many clients with a demurrage fee. To avoid it, adopt the rule to check the shipping line’s charges policy.

Effects of port congestion on your business

Port congestion has compounded adverse effects on businesses. Aside from shipment delays, there can be spoilage of perishable goods and up inventor costs. Learning about the main port congestion threats is vital to preventing shipping disruptions.

Shipping delays

The biggest drawback of port congestion on businesses is delayed deliveries. In some cases, perishable goods may spoil after their long journey or extended containment time. To prevent this, try to find all the necessary information about the port and check if they can provide you with reliable storage space.

Making endless excuses to your customers while your deliveries are stuck in the port queue for weeks or months can make you feel like you have your hands tied behind your back. If facing rough delays, try to notify your buyers so that they know their orders will arrive late. Working with carriers that know how to handle port congestion issues can help you save your reputation and stay in the race despite occasional delays.

Shortage of supplies

Port congestion will not favor your business if you import products for your store and inventory. The worst-case scenario is that you won’t have more products to sell, or you may not get your hands on the necessary goods to keep your business going. Plan your shipping volumes precisely and calculate what part of the shipped goods you expect to use for maintaining your business.

Communicate actively with your vendors to stay updated on supply flow changes. Discuss the supply intensity and quality, and try to resolve possible troubles with the vendor. It will also make your customer-supplier relationships stronger.

Sky-high port costs

Shipping lines usually give their clients three to five days to use their containers. Port congestion forces businesses to pay demurrage penalties for the exceeding days beyond the agreement. Other additional costs include storage, detention, and inventory fees.

To reduce the risk of unwanted expenses, try to plan your shipments thoroughly and communicate effectively with the supply chain members. You can contact the shipping line before launching the transit to find out the current situation. If a port congestion queue seems stuck, it’s probably reasonable to ship your products from another, less congested spot.

How can businesses avoid congestion effects?

The best way to reduce the damage to port congestion is to work with a reliable shipping carrier. While finding the best shipping company requires a lot of research, a quick way to get leads is by visiting an online freight shipping marketplace. Platforms like GoShip will help you avoid congestion issues and assist with filling out the required paperwork.

Visit our website to find reliable carrier services that deal with port congestion and work out how to deliver your items on time. GoShip offers uninterruptable access to shipping rates, carrier profiles, and digital tools to get a free FTL quote or LTL freight quote today.

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