How Does Port Congestion Impact Your Business?
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How Does Port Congestion Impact Your Business?
port congestion

Dealing with delayed shipments and angry customers is any business owner’s nightmare.

You may never have thought too hard about shipping ports, but the fate of your deliveries is in their hands. Any form of delays or congestion in ports will have a domino effect on shipping lines, cargo handlers, your business, and sales.

Port congestion has compounded negative effects on businesses. Aside from delays in shipments, there can even be spoilage of perishable goods and hiking up inventory costs.

Is there anything business owners can do to reduce the risk of port congestion? Before anything else, let’s understand the function of shipping ports and the main causes of port congestion.

What are shipping ports?

Shipping ports are facilities that store and house vessels and container vans or ships. It is a terminal for container ships or trucks to load and unload cargo.

Ports contribute to about 70% of global trade, making them an essential aspect of the global economy.

What are the functions of ports?

There are many types of port facilities that specialize in different functions, such as cargo ports, seaports, and inland ports.

The main function of ports is to ensure the safety of loading and unloading cargo and passengers, while also providing the facilities to store or anchor the vessels.

Ports serve as a hub to dock and load and unload barges and ships with shipping containers, and store those containers if needed. The well-organized port operations are critical to the normal flow of international trade. 

What is port congestion?

Port congestion happens when vessels cannot dock in a port to unload and unload cargo. This happens because the port has reached maximum capacity.

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 has doubled in 2021 due to the pandemic. The average anchoring time is at 33 hours in May 2021 compared to 8 hours in 2019.

What are the causes of port congestion?

Here are the major reasons why 70% of ports worldwide are experiencing port congestion:

  • Shortage of container trucks and trailers
  • The large volume of cargo and excess stock
  • Extreme weather conditions
  • Shipping lines may take advantage of demurrage costs

How does port congestion impact your business?

Shipping delays

The biggest drawback of port congestion on businesses is delayed deliveries. If you’re a business owner, you’d know the stress that comes with dealing with shipping logistics. 

Having to make 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.

In some cases, perishable goods may even become spoiled after their long journey. Working with shipping carriers that don’t know how to navigate port congestion will eventually damage your reputation with customers.

Shortage of supplies

If you import your products for your store and inventory, port congestion will not do your business any favors. 

The worst-case scenario is that you won’t have any more products to sell, or you may not get your hands on the necessary goods to keep your business going. Port congestion may lead to businesses failing and slowing down.

Sky-high port costs

Shipping lines usually give shippers free 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.

What can businesses do about port congestion?

While the factors affecting port congestion are well out of an ordinary citizen’s hands, 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 marketplace.

Visit GoShip.com to find reliable shipping companies that know how to deal with port congestion. GoShip.com offers 24/7 instant online quotations using their freight calculator.

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