I am fortunate (or unfortunate) enough to see some of the transportation supply chains in action with my own two eyes. This may come as a surprise to some, but along with making finance and tech newsletters I am currently a licensed unlimited tonnage third mate who is able to navigate any size ship in the world and have been aboard thousand-foot long container ships/roll on roll off carriers in the past.

A memory that stands out to me was in Oakland, California during cargo ops. Containers were flying on and off the ship while trucks pull up to a marked spot for the gantry cranes to pick up the containers off the truck beds and place them in the ship bays. There is a giant conga line of trucks bringing the containers to the cranes. I will never forget when one particular truck pulled up to the spot and stopped abruptly. A heated argument between the truck driver and some of the longshoremen standing by. The driver got so frustrated that he got out of the truck and walked off effectively quitting the job right then and there with the keys still in the ignition!

Nobody moved the truck for over 3 hours and all cargo halted which caused a delay on our departure to Alaska - which in turn pushed other things back. This was because no truck driver wanted to drive a truck that wasn’t theirs since it wasn’t their contract, no longshoreman would dare step in a truck in the first place, and therefore the port and all unions involved had to have a meeting to figure out what to do. This was just one example - silly stuff like this happens all. the. time.

If I missed someone I apologize. As you can imagine, even slight miscommunication, stubbornness, or business politics between any of these parties can cause a massive delay at all stages of the supply chain. What’s crazy is that is just the supply chain at the port! We haven’t gotten to even the supply chain with the warehouses, railroads, and the dozens of other hands that cargo touches.

Let’s go back…

The shipping industry and trucking industry were already in a hanging balance before COVID. Trucking companies were starving for more drivers. On the flip side, many could argue that rampant complainants of unsafe work conditions or just simply bad bosses have been caused the shortage of truckers – we won’t get into semantics all that matters is there aren’t enough drivers then, and there aren’t enough now. On top of this, there was a global shortage of containers themselves. Containers get banged up more than you imagine - they break and sometimes just get lost!

Let me explain: When COVID broke out all manufacturers slowed down their purchase orders. Shipping companies and all unions involved reacted to the lower demand by tying vessels up, slowing down operations, or operating at a lower capacity. When global demand rocketed back (Amazon never sleeps or had COVID) all those manufacturers went back to full speed but the ports simply weren’t ready. You still had longshoreman unions battling COVID cases in their teams alongside truck drivers (which there was already a shortage of). Along with this, the warehouses faced the same issues and every step of the transportation supply chain was understaffed or operating at not high enough capacity. As you can imagine costs to ship anything and the time to deliver skyrocketed as you see below.

Ships are stacking up in harbors around the U.S. because there simply is a giant backlog. Below is a photo from Marine Traffic yesterday of all the ships at anchor off of Long Beach harbor. Every green circle is an anchored ship.

Ask anyone in the sailing industry and they will tell you this picture above is insanely abnormal. If you don’t believe me I will let J.P. Morgan show you in the graphs below.

The ripple effect of this is almost unimaginable and truly impossible to quantify. An impact you will see is goods at retail stores start to dwindle and shelves of all types are not being stocked. iPhones, clothes, chairs, pencils, literally everything in your house, and more comes from the sea by ship and then by truck. Even grocery is massively being affected by the trucking issues. It truly is a wild time and I don’t know the solution.

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-Gannon