What 3PLs Need to Know About Port Congestion

While the recent total blockage of the Suez Canal thrust the situation into the spotlight for a short time, day-to-day port congestion concerns continue to pose ongoing problems for the global economy.

This is especially true for third-party logistics (3PL) organizations that have been contracted on behalf of retailers, e-Commerce companies, or large-volume suppliers to manage their inventory storage, shipping, and tracking worldwide. With partners trusting 3PLs to satisfy shipping agreements no matter the current state of global goods movement, these companies need to understand existing challenges, prepare for future disruptions, and ensure they’re keeping clients in the loop at every step of the shipment.

Here’s what 3PLs need to know about the evolving challenge of port congestion.

 Key Takeaways

• Even the abatement of Covid restrictions can’t completely eliminate the reality of port congestion driven by larger cargo volumes and the massive ships necessary to carry products around the world.
• It can be difficult for 3PLs to gain reliable visibility into port operations, in turn causing shipment processing and approval to take longer than expected which may lead to delays.
• As container ship sizes and total product volumes continue to increase, 3PLs must be prepared for ongoing port congestion challenges. Eliminating these challenges is impossible, but there are ways to limit the damage. 

What’s causing port congestion?

While it’s easy to pinpoint the impact of COVID-19 on port congestion thanks to increased shipping volumes, reduced staff availability, and fluctuating supply chain conditions, these pandemic pressures are symptomatic of a larger root cause tied to fundamental shifts in the shipping market. Whereas the global health crisis brought weaknesses in the supply chain to light, in reality, they were already there. 

Yet another challenge is that ships are getting bigger — and ports designed decades ago are struggling to keep up. It makes sense; while some ports may have the capacity to expand operations and accommodate larger ships, many are constrained by environmental barriers, local regulations, or both.

Consider the Ever Given, the ultra-large container vessel recently stuck in the Suez Canal. As noted by Bloomberg, while this cargo ship belonged to a class of vessels capable of carrying more than 20,000 twenty-foot equivalent units (TEUs), ships with 25,000 TEU capacity are already under construction and it’s likely that 30,000 TEU vessels will arrive before the decade is over. Driven by the increasing amount of goods being purchased online and shipped around the world, these ultra-ultra-large ships pose docking challenges when they arrive, and timely unloading challenges for available port staff.

How is port congestion affecting 3PLs?

As Covid challenges evolved, 3PLs were forced to adapt quickly. Thankfully, receding pandemic pressures should help bolster port staff numbers and improve supply chain stability as we head into the second half of 2022. But, as noted above, even the abatement of Covid restrictions can’t completely eliminate the reality of port congestion driven by larger cargo volumes and the massive ships necessary to carry products around the world.

For 3PLs, persistent port problems pose three key challenges:

• Visibility

With compliance and customs regulations becoming more complex, even as cargo offloading times increase due to container ship volumes, it’s often difficult for 3PLs to gain reliable visibility into port operations. As a result, shipment processing and approval can end up taking longer than expected, in turn causing a domino effect as subsequent logistics processes must be pushed back or rescheduled.

• Variability

As the recent Ever Given debacle demonstrates, it’s impossible for 3PLs to predict what will happen to goods both on the way to the port and when they arrive. This means that shipments seemingly on track and on time can encounter unexpected roadblocks that suddenly upend predicted timelines.

• Value

The longer goods sit in port without being unloaded or processed, the lower the total value for 3PLs. With many logistics firms now competing in crowded markets for supplier and manufacturer contracts, offering best-in-class pricing coupled with streamlined logistics operations is key to getting noticed and critical to creating long-term relationships. Port problems, however, can derail anticipated value as 3PLs are often finding themselves facing lost revenue if contractual obligations can’t be met.

How can 3PLs proactively address the challenges related to port congestion?

While it’s impossible for 3PLs to control all port congestion concerns, it IS possible for these end-to-end logistics providers to mitigate their impacts with proactive 3PL software solutions, such as:

• Advanced tracking software

Container tracking software from Magaya makes it possible to track your ocean shipment containers anytime, anywhere. With support for more than 100 sealines worldwide, the Magaya container tracking solution delivers real-time visibility that boosts total efficiency by reducing the need for time-consuming manual tracking processes. When it comes to proactive cargo management, container tracking lets your company provide immediate notice to customers if shipments are rerouted or delayed.

• Real-time rate monitoring

Using Magaya Rate Management, 3PL companies can take control of their freight rate data and processes. Magaya Rate Management lets you easily search and compare entire rate sets — including margins, surcharges, spot rates, and tariffs to provide accurate and up-to-date rate information. The result? Faster custom quotes that reflect current rate values to deliver maximum ROI for 3PLs and ensure any quotes generated reflect the impact of current port congestion levels on worldwide shipping rates.

• Self-service shipment visibility

Clients want to know where their goods are, on-demand. The Magaya Digital Freight Portal makes this possible with self-service shipment visibility for customers whenever and wherever they need it. Simple setup and easy integration with Magaya’s container tracking solution helps keep customers in the loop about potential port delays — without the need for 3PL staff to locate and communicate current tracking data. This self-service tracking adds value to any 3PL partnership, in turn helping providers stand out from the crowd and cultivate confidence that they’re capable of both anticipating and managing potential port problems.

• Global supply chain connections

To succeed in the global logistics market, evolving supply chain connections are critical, and the Magaya Network makes it possible for 3PLs to connect with hundreds of potential supply chain partners. Simply publish your profile and make your brand visible to partners worldwide; partners that can help your company navigate the evolving reality of port congestion challenges thanks to local familiarity and knowledge of key customs requirements. What’s even better? The Magaya solution lets you seamlessly share shipment information across agents, all within a secured network environment.

As container ship sizes and total product volumes continue to increase, 3PLs must be prepared for ongoing port congestion challenges. And while eliminating these issues is impossible, it’s possible for logistics providers to empower operations, reduce total friction and improve customer satisfaction with proactive shipping, tracking, and rate management 3PL software solutions from Magaya.