Americans Are On A Pandemic Shopping Spree. Ports Are Overwhelmed

That big container ship stuck in the Suez Canal was part of a global shopping spree that has caused a surge in shipping, a shortage of containers and weeks long backlogs at ports around the world. 

It's a nice problem to have after a recession but could contribute to a future slowdown thanks to rising prices driven by increased demand. JL 

Winnie Hu reports in the New York Times:

The extraordinary surge of household cargo has shattered records at the Port of New York and New Jersey. Cargo volumes were 23% higher each month from August through December 2020, compared (to) 2019. It moved 755,437 cargo containers in October, the busiest month in the history of the port. And the stuff just keeps coming. There was no post-holiday lull as cargo volume in January rose 17% compared with the previous year. Americans' buying helped bring chaos to global shipping and created logistical challenges for freight

The stacks of cargo containers can tell a lot about how people spent their year at home during the pandemic.

There were living-room sets from Bob’s Discount Furniture for families busy redecorating; kitchen appliances for new home buyers; espresso machines for coffee lovers who became their own baristas; and cases of sparkling wines from France, Spain and Italy for those who drank more when they were pouring and could afford to indulge.

The extraordinary surge of household cargo has shattered records at the Port of New York and New Jersey, a sprawling network of docks, terminals and open storage areas that span a half-dozen sites. It moved 755,437 standard cargo containers in October alone — the busiest month in the history of the port, which has been handling cargo containers since the 1960s.

“Never before have we had anything like that,” said Bethann Rooney, the deputy director of port operations. “The cargo was coming fast and furious into the country."

The port, which is operated by the Port Authority of New York and New Jersey, a bistate municipal agency, is the largest on the East Coast and the third largest in the nation.

Its cargo volumes were up to 23 percent higher each month from August through December 2020, compared with the same months in 2019.

And the stuff just keeps coming. There was no post-holiday lull this winter as cargo volume in January rose 17 percent compared with the previous year. In February, it was up 7 percent, a new high for that month.

When the pandemic set off buying sprees among American consumers, it helped bring chaos to global shipping and created logistical challenges for freight moving between continents in colorful metal boxes that are stacked up like pieces in a Tetris game.

A shortage of cargo containers resulted in widespread delays, and at some U.S. ports — including Los Angeles, where the virus slowed operations by sickening workers and truck drivers, or forcing them to quarantine — the influx of goods has created backlogs. But the shipping boom has turned out to be a bright spot for the Port Authority of New York and New Jersey. The port is the only part of the agency’s wide-ranging portfolio — which includes the region’s three major airports, the Port Authority Bus Terminal in Midtown Manhattan, the PATH train and six bridge-and-tunnel crossings — that has thrived during the pandemic.

Though monthly cargo volumes initially dropped at the height of the pandemic as factories and stores shut down, they started picking up in August as shoppers opened their wallets and manufacturers and retailers scrambled to restock their shelves and get ahead of any future shutdowns.

Still, the soaring cargo volumes have created more traffic and congestion at the port, and stretched equipment and supplies. The port is the gateway for freight headed across the Northeast as well as parts of the Midwest and Canada.

And that was before a giant container ship, the Ever Given, got stuck in the Suez Canal for nearly a week and caused a traffic jam that will result in delays for some ships heading to the Port of New York and New Jersey and cause temporary upticks in cargo when the ships finally arrive.

“We’re operating right now at the breaking point,” Ms. Rooney said. “This is going to be our normal at least for the first half of the year, and that’s as far as anyone is willing to predict at this point.”

Even so, the increased port revenue has not been enough to offset the agency’s far larger financial losses from steep drops in passenger volumes at the airports and fewer cars and trucks at the bridges and tunnels. The Port Authority has projected that it will lose $3 billion in revenue from March 2020 to March 2022. The port has avoided the backlogs experienced at other ports, Ms. Rooney said, because officials took steps early in the pandemic to make sure the port did not run out of room.
Many businesses bringing in imports during the pandemic had nowhere to put them because their warehouses were full and the port does not have its own warehouses.

So the port dispatched scouts to find more than 70 off-site warehouses and parking lots in New Jersey and Connecticut that could be used for storage, and officials helped connect businesses with those sites. As a result, the port was able to keep its docks clear rather than clogged with cargo.

Even before the pandemic, port officials had faced rising volumes as a result of regional population growth, Ms. Rooney said, and had developed an expansion plan, which includes building more rail infrastructure to move cargo.

It also calls for extending the port’s operating hours to nights and weekends. (Some terminal operators have already added Saturday hours during the pandemic.)

Across New York and New Jersey, the top category of shipping imports during the pandemic was beverages, spirits and vinegar. Total volume rose more than 9 percent in the second half of 2020 compared with the same period the year before, according to Mabel Ng, a product management director for IHS Markit, a company that tracks shipping through its Global Trade Atlas database.

Shipments of wine, vermouth, hard cider and mead, and cordials and liqueurs all rose significantly as people became home bartenders. Nonalcoholic beverages such as flavored bottled waters and milk-based drinks were also in higher demand.

Imports of furniture, bedding, cushions and lamps soared nearly 35 percent in the second half of 2020, compared with the same period a year earlier, reflecting a boom in home decorating. The increases included wooden furniture used in kitchens and bedrooms, metal-frame seats, mattresses and supports, and desk, table and floor lamps.

As people spent much more time cooking, baking and eating at home, the roughly 117,000 tons of plastic table and kitchen wares shipped to the port in the second half of last year represented a 12.5 percent jump from the same period the year before.

For Jeannie Kim, 31, a marketing director in Brooklyn, it was a good time to upgrade to a Nespresso coffee machine, which uses capsules. “Before it wasn’t really a priority because I would mix it up with coffee shops,” she said. “In quarantine, I’m working at home so I felt justified to invest in a better machine because it’s my sole source of coffee now.”

People have splurged on other drinks, too. Many have switched to premium imported brands, said Peter Lijewski, a vice president for Breakthru Beverage Group, a wholesale beverage distributor, which has received more shipments of premium wines and spirits, including French, Italian and Spanish wines and French Champagne and cognac.

“There’s this whole experiment and experience in terms of brands people had never tried before,” Mr. Lijewski said. “It’s like trying a new sport or a new restaurant. I may never have bought a $25 bottle of wine before and I tried it and, Wow, it’s really good. For others, the pandemic has been a chance to reimagine their homes. Bob’s Discount Furniture, a national chain of 140 stores, has never been busier with the biggest demand for living-room sets, including sofas and sectionals, followed by bedroom sets.

“With the increased time at home, people are craving comfort,” said Carol Glaser, the company’s chief merchandising officer. “Furniture is the comfort food of the home.”

Kitchen and laundry-room makeovers, as well as a surge in home sales as more city dwellers moved to the suburbs, have also helped fuel a “double-digit increase” in LG’s sales of refrigerators, stoves, dishwashers, washing machines and dryers shipped from factories in Asia, according to John I. Taylor, a senior vice president at LG Electronics USA.

“We’ve never seen this level of demand in the industry and our factories are working overtime,” Mr. Taylor said.

The company is also importing more televisions, computer monitors and laptops, he added, as people spend more time working, studying or just relaxing at home.

Hattie Kolp, 29, has been one of the fixer-uppers helping to drive the surge in cargo shipping. Her home improvement projects in a rent-stabilized Upper West Side apartment have helped attract more than 32,000 followers on Instagram.

When Ms. Kolp, a special-education teacher at a Harlem school, started working more at home, she turned her guest bedroom into an office complete with a green velvet couch and bookshelves made in Asia that she ordered online. At one point, she tracked her couch crossing the Pacific in a cargo container to a West Coast port before it traveled over land to Manhattan.

“I think it just shows us that very little is made in the U.S.,” she said. “It’s really bringing attention to how far stuff travels to get to us.”