California ports warning

Port of Long Beach More than US$90bn of trade could be delayed if congestion at the ports of Los Angeles and Long Beach (pictured) carries on until October. Photo: Port of Long Beach

Delays at California ports will have serious financial consequences, new analysis warns.

Risk modelling company, Russell Group found a combined value of US$90bn dollars’ worth of trade may be disrupted if the delays at Long Beach and Los Angeles ports continues into October.

"Once again, the disruption at Long Beach and Los Angeles ports are a continued extension of the disruptions we saw at the end of 2020, where a large demand and COVID safety protocols have created the ‘perfect storm’ at ports,” said Russell Group MD, Suki Basi.

These delays will create supply chain angst for organisations and leaving US consumers with reduced availability of certain goods during the holiday season, said Russell Group.

Two disruption scenarios

The Group’s ALPS Marine platform has modelled the disruption across two scenarios from the ‘Russell Scenario Factory’.

Russell’s analysis shows that in the worst-case scenario (Scenario Two) more than US$90bn dollars of trade, which includes US$6.2bn dollars of clothing will be delayed if the delay at both ports carries on until October.

In Scenario One, only US$49.4bn dollars of trade is disrupted with US$4bn dollars of clothing delayed at both ports.

Russell’s scenario analysis is based on trade flowing in and out of Los Angeles and Long Beach from the week beginning 24 August through to 30 September for Scenario One and 24 August to 31 October for Scenario Two. The data used is an estimation based on 2020 figures.

Speaking about the backlog of ships and consequent delays in unloading goods, Basi said: "In the long run this increases the processing time for all container ships entering and means that certain goods are delayed in being transported from ports, leaving organisations with supply chain disruption and consumers with reduced choice on the supermarket shelf. This situation is not unique to Long Beach or Los Angeles and is happening across the global economy from Rotterdam to Ningbo.

"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. 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."

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