US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Supply Chain Alternatives: Will Rerouting to Florida Make the Difference?

The term “supply chain” was, before the COVID-19 pandemic, known to but a few Americans. However, the phrase is now on everybody’s lips as consumers confront empty shelves, rising prices, and few answers as to when the crisis will abate. One key bottleneck in the supply chain is that the California ports – such as those in Long Beach (near Los Angeles) – do not have the capacity to unload all of the ships sailing outside their harbors as quickly as they would like.

A potential solution to the problem has been floated: recommending shippers to reroute to use ports in Florida instead. While the journey would add about two weeks and cost more money for ships currently in the Pacific to reach Florida (even longer if the vessel is too large for the Panama Canal), once there, 8 of the 15 Floridian ports are able to accommodate container ships. However, only two have channel depths as deep as those on the west coast so as to accommodate the biggest container ships. Still, there are others further up eastern coast that have similar channel depths to the Ports of Long Beach, Oakland, Sea Tac Alliance, and Vancouver. 

Furthermore, some suggest that rail and truck capacity in the region is under less stress compared to the facilities in California, making it easier to find the railcars, locomotives, and tractor-trailers needed to move off-loaded cargoes to their final destination. Thus, it may be time- and cost-effective for some shippers to make the lengthy voyage from the Pacific to the Atlantic coast.

However, shipping experts suggest this is more of a long-term potential solution rather than something that is going to solve the crisis in the next few weeks or months. Shippers are already paying historically high rates for shipping containers and may balk at adding even more cost to traverse the Panama Canal. Even among those that decide the cost is worth it, few will be making that change immediately due to the need to realign other shipping plans as most containers that dock are already booked for outgoing goods at the originally intended port.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Freedonia Focus reports such as Freight by Waterways: United States, Freight Services: United States, and Freight by Truck: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

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