West Coast ports to expand operations, tackle bottlenecks
As government leaders and the private sector attempt to address supply chain problems, industry experts say delays, disruptions will last well into 2022.
Supply chain challenges and product shortages remain in the spotlight, with government and private-sector officials taking steps this week to alleviate the strain on West Coast ports.
Representatives from the Biden administration met Wednesday with officials from the ports of Los Angeles and Long Beach, trade unions, and private companies to address the problems, saying the ports will move toward 24/7 operations to help speed the flow of goods through the Southern California gateways, which serve as the point of entry for 40% of shipping containers to the United States. Both ports took steps in September to expand operating hours, with Long Beach maximizing night operations and Los Angeles expanding weekend operating gate hours, and officials there say they are working with supply chain stakeholders to expand further.
The Port of Los Angeles will host a press conference at 10 a.m. Pacific Time/1 p.m. Eastern Time today to discuss details of the expansion plan.
Industry trade groups applauded the efforts Wednesday, but pointed to a slew of problems plaguing the supply chain, including a labor crisis that has been building throughout the pandemic. In a statement Wednesday, the Consumer Brands Association, which represents the consumer packaged goods industry, said today’s higher prices and supply chain bottlenecks are symptoms of the labor shortage in the United States. Consumer Brands President and CEO Geoff Freeman listed steps to alleviate the problem, including financial incentives for recruiting truck drivers, temporary visas to bring in workers to fill employment gaps, and “if needed, targeted use of the National Guard to relieve significant supply chain congestion.”
“We cannot ignore the warning signals of higher prices and reduced availability,” Freeman said in a press statement. “While our problems will not be solved overnight, with the administration’s engagement we are on a clearer path to tackling the supply chain crisis from every angle.”
The U.S. Chamber of Commerce echoed those sentiments, emphasizing corporate efforts to speed the flow of goods to shelves. Walmart, Target, FedEx, UPS, Samsung, and The Home Depot were among the companies at the White House Meeting Wednesday that have agreed to use the expanded hours on the West Coast to move more cargo off the docks.
“American companies are stepping up to combat the bottlenecks and delays and this will make a crucial difference as we seek to tackle this problem head-on,” Suzanne Clark, U.S. Chamber of Commerce president and CEO, said in a prepared statement. “This supply chain crisis is hurting businesses and consumers alike, leading to inflation and shortages of key supplies. Coupled with massive labor shortages, this is a major threat to our fragile economic recovery and long-term competitiveness.”
The degree to which West Coast port efforts will help alleviate supply chain pressures remains to be seen. In the meantime, other experts say the delays and disruptions caused by tight capacity, rising prices, a lack of labor, and accelerating consumer demand are likely to last well into 2022.
Alan Holland, CEO of intelligent sourcing solutions provider Keelvar, said earlier this month that the problems extend well beyond U.S. borders as shippers struggle with the higher costs of transporting goods. Companies that have strategic sourcing partnerships with transportation providers are in a better position when demand exceeds capacity, he said, leaving transactional buyers—those who typically rely more on spot market rates—at the end of the line. He said bulky goods such as furniture and home furnishings, as well as voluminous, low-value goods such as toys, will be among those in short supply through the holiday season.
“There’s a trust issue here,” Holland explained. “Where companies have decided to invest in partnerships and build mutual trust, those companies are getting their goods moved with greater certainty. Others who were tactical buyers … are suffering.”
Holland says he expects continued volatility beyond peak shipping season.
“[I think] it’s fair to say it will be close to 12 months, if not longer,” before there is any relief in the supply chain, he said. “Ahead of Chinese New Year, there won’t be any change in the situation; we can expect a lot of volatility.”
Zac Rogers, assistant professor of supply chain management at Colorado State University and a researcher for the monthly Logistics Manager’s Index (LMI), agreed, pointing to the high volume of goods moving through the supply chain since the summer of 2020—a situation that shows no signs of abating. The LMI gauges economic activity across the transportation and logistics industry, and has been tracking an extended growth run since the beginning of the pandemic. Consistent high transportation and warehousing costs coupled with tight capacity in both areas indicate a tough road ahead, he said.
“It seems like the supply chain is tired,” Rogers said in mid-September, commenting on the rapid growth in the channel since February of this year, in particular. “[Market conditions] are probably going to be tight for quite a while longer.”
New Jersey is home to the most congested freight bottleneck in the country for the seventh straight year, according to research from the American Transportation Research Institute (ATRI), released today.
ATRI’s annual list of the Top 100 Truck Bottlenecks aims to highlight the nation’s most congested highways and help local, state, and federal governments target funding to areas most in need of relief. The data show ways to reduce chokepoints, lower emissions, and drive economic growth, according to the researchers.
The 2025 Top Truck Bottleneck List measures the level of truck-involved congestion at more than 325 locations on the national highway system. The analysis is based on an extensive database of freight truck GPS data and uses several customized software applications and analysis methods, along with terabytes of data from trucking operations, to produce a congestion impact ranking for each location. The bottleneck locations detailed in the latest ATRI list represent the top 100 congested locations, although ATRI continuously monitors more than 325 freight-critical locations, the group said.
For the seventh straight year, the intersection of I-95 and State Route 4 near the George Washington Bridge in Fort Lee, New Jersey, is the top freight bottleneck in the country. The remaining top 10 bottlenecks include: Chicago, I-294 at I-290/I-88; Houston, I-45 at I-69/US 59; Atlanta, I-285 at I-85 (North); Nashville: I-24/I-40 at I-440 (East); Atlanta: I-75 at I-285 (North); Los Angeles, SR 60 at SR 57; Cincinnati, I-71 at I-75; Houston, I-10 at I-45; and Atlanta, I-20 at I-285 (West).
ATRI’s analysis, which utilized data from 2024, found that traffic conditions continue to deteriorate from recent years, partly due to work zones resulting from increased infrastructure investment. Average rush hour truck speeds were 34.2 miles per hour (MPH), down 3% from the previous year. Among the top 10 locations, average rush hour truck speeds were 29.7 MPH.
In addition to squandering time and money, these delays also waste fuel—with trucks burning an estimated 6.4 billion gallons of diesel fuel and producing more than 65 million metric tons of additional carbon emissions while stuck in traffic jams, according to ATRI.
On a positive note, ATRI said its analysis helps quantify the value of infrastructure investment, pointing to improvements at Chicago’s Jane Byrne Interchange as an example. Once the number one truck bottleneck in the country for three years in a row, the recently constructed interchange saw rush hour truck speeds improve by nearly 25% after construction was completed, according to the report.
“Delays inflicted on truckers by congestion are the equivalent of 436,000 drivers sitting idle for an entire year,” ATRI President and COO Rebecca Brewster said in a statement announcing the findings. “These metrics are getting worse, but the good news is that states do not need to accept the status quo. Illinois was once home to the top bottleneck in the country, but following a sustained effort to expand capacity, the Jane Byrne Interchange in Chicago no longer ranks in the top 10. This data gives policymakers a road map to reduce chokepoints, lower emissions, and drive economic growth.”
It’s getting a little easier to find warehouse space in the U.S., as the frantic construction pace of recent years declined to pre-pandemic levels in the fourth quarter of 2024, in line with rising vacancies, according to a report from real estate firm Colliers.
Those trends played out as the gap between new building supply and tenants’ demand narrowed during 2024, the firm said in its “U.S. Industrial Market Outlook Report / Q4 2024.” By the numbers, developers delivered 400 million square feet for the year, 34% below the record 607 million square feet completed in 2023. And net absorption, a key measure of demand, declined by 27%, to 168 million square feet.
Consequently, the U.S. industrial vacancy rate rose by 126 basis points, to 6.8%, as construction activity normalized at year-end to pre-pandemic levels of below 300 million square feet. With supply and demand nearing equilibrium in 2025, the vacancy rate is expected to peak at around 7% before starting to fall again.
Thanks to those market conditions, renters of warehouse space should begin to see some relief from the steep rent hikes they’re seen in recent years. According to Colliers, rent growth decelerated in 2024 after nine consecutive quarters of year-over-year increases surpassing 10%. Average warehouse and distribution rents rose by 5% to $10.12/SF triple net, and rents in some markets actually declined following a period of unprecedented growth when increases often exceeded 25% year-over-year. As the market adjusts, rents are projected to stabilize in 2025, rising between 2% and 5%, in line with historical averages.
In 2024, there were 125 new occupancies of 500,000 square feet or more, led by third-party logistics (3PL) providers, followed by manufacturing companies. Demand peaked in the fourth quarter at 53 million square feet, while the first quarter had the lowest activity at 28 million square feet — the lowest quarterly tally since 2012.
In its economic outlook for the future, Colliers said the U.S. economy remains strong by most measures; with low unemployment, consumer spending surpassing expectations, positive GDP growth, and signs of improvement in manufacturing. However businesses still face challenges including persistent inflation, the lowest hiring rate since 2010, and uncertainties surrounding tariffs, migration, and policies introduced by the new Trump Administration.
As U.S. businesses count down the days until the expiration of the Trump Administration’s monthlong pause of tariffs on Canada and Mexico, a report from Uber Freight says the tariffs will likely be avoided through an extended agreement, since the potential for damaging consequences would be so severe for all parties.
If the tariffs occurred, they could push U.S. inflation higher, adding $1,000 to $1,200 to the average person's cost of living. And relief from interest rates would likely not come to the rescue, since inflation is already above the Fed's target, delaying further rate cuts.
A potential impact of the tariffs in the long run might be to boost domestic freight by giving local manufacturers an edge. However, the magnitude and sudden implementation of these tariffs means we likely won't see such benefits for a while, and the immediate damage will be more significant in the meantime, Uber Freight said in its “2025 Q1 Market update & outlook.”
That market volatility comes even as tough times continue in the freight market. In the U.S. full truckload sector, the cost per loaded mile currently exceeds spot rates significantly, which will likely push rate increases.
However, in the first quarter of 2025, spot rates are now falling, as they usually do in February following the winter peak. According to Uber Freight, this situation arose after truck operating costs rose 2 cents/mile in 2023 despite a 9-cent diesel price decline, thanks to increases in insurance (+13%), truck and trailer costs (+9%), and driver wages (+8%). Costs then fell 2 cents/mile in 2024, resulting in stable costs over the past two years.
Fortunately, Uber Freight predicts that the freight cycle could soon begin to turn, as signs of a recovery are emerging despite weak current demand. A measure of manufacturing growth called the ISM PMI edged up to 50.9 in December, surpassing the expansion threshold for the first time in 26 months.
Accordingly, new orders and production increased while employment stabilized. That means the U.S. manufacturing economy appears to be expanding after a prolonged period of contraction, signaling a positive outlook for freight demand, Uber Freight said.
The surge comes as the U.S. imposed a new 10% tariff on Chinese goods as of February 4, while pausing a more aggressive 25% tariffs on imports from Mexico and Canada until March, Descartes said in its “February Global Shipping Report.”
So far, ports are handling the surge well, with overall port transit time delays not significantly lengthening at the top 10 U.S. ports, despite elevated volumes for a seventh consecutive month. But the future may look more cloudy; businesses with global supply chains are coping with heightened uncertainty as they eye the new U.S. tariffs on China, continuing trade policy tensions, and ongoing geopolitical instability in the Middle East, Descartes said.
“The impact of new and potential tariffs, coupled with a late Chinese Lunar New Year (January 29 – February 12), may have contributed to higher U.S. container imports in January,” Jackson Wood, Director, Industry Strategy at Descartes, said in a release. “These trade policy developments add significant uncertainty to global supply chains, increasing concerns about rising import costs and supply chain disruptions. As trade tensions escalate, businesses and consumers alike may face the risk of higher prices and prolonged market volatility.”
New York-based Cofactr will now integrate Factor.io’s capabilities into its unified platform, a supply chain and logistics management tool that streamlines production, processes, and policies for critical hardware manufacturers. The combined platform will give users complete visibility into the status of every part in their Bill of Materials (BOM), across the end-to-end direct material management process, the firm said.
Those capabilities are particularly crucial for Cofactr’s core customer base, which include manufacturers in high-compliance, highly regulated sectors such as defense, aerospace, robotics, and medtech.
“Whether an organization is supplying U.S. government agencies with critical hardware or working to meet ambitious product goals in an emerging space, they’re all looking for new ways to optimize old processes that stand between them and their need to iterate at breakneck speeds,” Matthew Haber, CEO and Co-founder of Cofactr, said in a release. “Through this acquisition, we’re giving them another way to do that with acute visibility into their full bill of materials across the many suppliers they work with, directly through our platform.”
“Poor data quality in the supply chain has always been a root cause of delays that create unnecessary costs and interfere with an organization’s speed to market. For manufacturers, especially those in regulated industries, manually cross-checking hundreds of supplier communications against ERP information while navigating other complex processes and policies is a recipe for disaster,” Shultz said. “With Cofactr, we’re now working with the best in the industry to scale our ability to eliminate time-consuming tasks and increase process efficiencies so manufacturers can instead focus on building their products.”