Combined value of $90 billion dollars’ worth of trade may be disrupted if the delays at Long Beach and Los Angeles ports continues into October,
A combined value of $90 billion dollars’ worth of trade may be disrupted if the delays at Long Beach and Los Angeles ports continues into October, creating supply chain angst for organisations and leaving US consumers with reduced availability of certain goods during the holiday season.
This is the analysis of Russell Group, a leading risk modelling company, whose 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 $90 billion dollars of trade, which includes $6.2 billion dollars of clothing will be delayed if the delay at both ports carries on until October.
In the least bad scenario (Scenario One) only $49.4 billion dollars of trade is disrupted with $4 billion 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 24th August through to 30th September for Scenario One and 24th August to 31st October for Scenario Two. The data used is an estimation based on 2020 figures.
Commenting on the release of the modelling figures, Russell Group MD Suki Basi said:
“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. In this situation, ships are delayed entering the ports, creating a backlog of ships waiting to enter the port resulting in time lags for the unloading of goods.
“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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