The ongoing supply chain challenges facing major ports in the United States and the high demand for cold storage is driving investment in capacity, according to a panel of experts, but the continued challenges are unlikely to go away any time soon.
A panel at the National Fisheries Institute’s Global Seafood Market Conference – running from 15 to 19 January in Palm Springs, California, U.S.A. – addressed a number of challenges continuing to face the logistics side of the seafood industry; which resulted in the “death” of the just-in-time model of the supply chain. In addition to the model shift, some panelists are recommending a shift in port access for cargo shipped from overseas as they predict capacity issues will continue to plague shipping and cold storage in the U.S.
Delays at major points began to compound during the Covid-19 pandemic, to the point that in August 2022 more than 130 vessels were actively waiting to get access to a port to unload. Those delays had distributors looking for other places to offload cargo – especially when it comes to refrigerated cargo – but the capacity in the U.S. is still limited.
In some instances, delays at ports are a function of the increasing demand being placed on them by larger and larger vessels, Lineage Logistics Senior Vice President of Sales Dan DiDonato said. Those larger vessels are not backed up by higher capacity on the port side.
“If you go back 20 years, the ships that arrived in the United States were 4,000 TEUs, [containers] 6,000 TEUs, and the window to retrieve those containers was from 7 a.m. to 2 p.m.,” DiDonato said. “Now you have these 16,000, 18,000, 20,000 TEU ships and the windows at ports are 7 a.m. to 2 p.m. So how do you have all that cargo moving through the piers and into the roads and into the warehouses at the same speed? The math doesn’t work. So that’s the biggest challenge that we see.”
The infrastructure, DiDonato said, can’t handle the volume of shipments that are coming into the U.S. – and the problem is unlikely to be solved soon.
That means seafood companies have relatively few choices when it comes to getting access to necessary cargo, Slade Gorton Vice President of Foodservice Sales and Marketing James Berger said.
“You have two choices really. You either end up paying demurrage at the port while you’re waiting for trucks to get picked up and chassis to be available, or you end up paying Lineage or another cold storage to park your load at the door while we’re waiting for freezer space to open up,” Berger said. “There’s not a lot of other choices at this point, and all of that costs something, and those costs get passed along to the customer at the end of day. So either the cost of goods go up, or the margins shrink.”
With the industry moving towards a “just-in-case” model of having more supplies on hand, cold storage facilities are being taxed to their limits. While additional capacity being built in the U.S., according to DiDonato it isn’t likely to solve the problem.
“Most of that capacity is replacing old capacity,” he said. “So you have a limited amount of buildings that are coming online, especially right now. Whatever we see being built today is three to five years in the making, it doesn’t happen in 12 months.”
DiDonato said he predicts there will continue to be capacity issues throughout 2023.
“I think there will continue to be limited capacity in major tier one markets – Los Angeles, New Jersey, Boston, Miami, Houston, Virginia – all the markets that have typically been the entry point of choice for multiple people in the room,” he said.
The one positive side of those problems, however, is companies are starting to diversify ports of entry more than in the past.
“I think for years we’ve always talked about using the other ports on the east and the west, and we see a lot of that happening today,” DiDonato. “People are now realizing that everything doesn’t have to come in to Jersey, so they are utilizing different supply chains and different strategies to bring those goods to the market.”
Photo courtesy of Sheila Fitzgerald/Shutterstock
