WHERE HAVE ALL THE CONTAINER SHIPS GONE?
BY TINGLONG DAI AND CHRISTOPHER TANG ne of the most recognizable images of the supply chain crisis is that of nearly 100 container ships waiting to unload in October 2021. Both Los Angeles and Long Beach were represented, as they are sister ports. This summer, the same ports have been uncannily quiet. The time period from January to July of 2023 saw a decrease of 24% in the number of twenty-foot equivalent unit (TEU) containers going through the Port of Los Angeles, compared to that same period in 2022. The Port of Long Beach experienced an even greater decrease of 28.5%. Where have the ships gone? Will the decline in shipping volume at these two ports be transitory? Beneath the tranquility of these two
ports, a global supply chain transformation is taking place. This structural change in the chain will affect the future operations of many US ports for years to come. Two key factors triggered the ongoing supply chain transformation. First, even the most pro-China US executives now recognize the need to diversify their supplier base away from China. For one thing, they find it costly to source from China due to the rapid rise in labor costs and the persistent 25% import tariffs on goods imported from China. These combinations diminished the economic incentive to source from China. What’s more, the conventional argument that a China-centric supply chain helps companies tap into the Chinese market is now being called into question. With notable exceptions, such
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as Tesla’s electric vehicles and Apple’s devices, sales of many US brands have been declining in China since the trade war that began in 2018, and this decline has no signs of abating. For example, GM’s market share in China, including its joint ventures, has fallen from roughly 15% in 2015 to below 10% in 2022. There is a growing sense that American brands are out of favor with Chinese consumers. Second, prolonged shortages of basic products such as N95 masks and chips during the COVID-19 pandemic have stoked public fear, prompting the White House to develop plans, with bipartisan support, to revitalize American manufacturing and secure critical supply chains for semiconductor chips, pharmaceuticals, EV batteries, and critical minerals. In the private sector, geopolitical