Global supply chain 'a disaster' for Long Island pavement firm - Newsday

2022-05-14 15:24:54 By : Mr. Vincent Weng

Regent Tek Industries Inc.'s shipment of resin was finally set for delivery after making its way from Portugal to the Port of New York and New Jersey. But the container sat at a terminal for nearly two weeks before getting trucked to the company's warehouse in Shirley.

Helen Torkos, Regent Tek's owner, said her company became a "victim" of the global supply chain crisis, which has caused shipping delays for businesses throughout the region as a result of the COVID-19 pandemic.

“Our production was halted because we were not able to get the product in on time, and the cost broke into our profit margin significantly. And it hurt us,” Torkos said.

Logistics and shipping industry experts fear a production and shipping boom this summer will clog the distribution pipeline even more at the Port of New York and New Jersey, which has been handling record import volumes. The summer’s peak holiday and back-to-school shipping season could potentially collide with a surge of goods from Shanghai, after factories now on lockdown due to the pandemic reopen and ramp up production to complete back-orders, industry experts said.

Torkos' company of 25 employees is one of only about six in the nation to produce road pavement markings used for traffic and pedestrian safety. Regent Tek needs resin and other commodities to manufacture thermoplastic, the bright yellow and white reflective lines ubiquitous on roads across the nation, she said.

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Regent Tek has had trouble finding key commodities overseas, and also has hit snags at the Port of New York and New Jersey, the third-largest port in the nation, Torkos said.  

"Between the congestion [at the port] and the actual containers not coming in on time, it was a disaster," Torkos said.

Contributing to the supply chain backup has been labor and trucking shortages,  as well as a warehousing crunch, industry experts said. There is anticipation that local ports will receive more traffic from shippers seeking to avoid West Coast ports, which once were congested and now have started longshore labor talks.

“The ports are jammed, so the products cannot even come in, and every secondary delay that the product sits at the ports is going to lead to inventory problems in the country,” said Sudhir Sachdev, president of the Association of Supply Chain Management New York City-Long Island Forum and a business management assistant professor at Farmingdale State College.

To offset delays, some local businesses have been stockpiling goods, connecting with a customs broker, or forging new relationships with suppliers and, when possible, purchasing items locally. 

The Port Authority leases space to five marine facilities: Port Newark, Port Authority Marine Terminal-Elizabeth, Port Jersey, Howland Hook and Port Authority Marine Terminal-Brooklyn.

 Last year at New York's ports, “We did not see any more than three to four ships anchor at a time, and those vessels waited an average of 1.5 days to get in,” said Beth Rooney, director of the port department at the Port Authority.

That average has gone up this year. Year-to-date, a ship waits an average of 3.7 days before accessing the port. On May 13, there was some backlog, with 17 ships docked. An average of 11 vessels were docked daily during the week of May 6. There was an average of nine waiting to enter the port each day the week of April 29.

“We can’t rely on information on when the ship is going to arrive and when the container is going to be brought off the ship. In the last 18 months, it’s never been reliable,” said Torkos, who is now ordering ahead two months to play catch-up and fulfill new orders.

Cranes are used to unload cargo from ships and transfer to trucks at Red Hook Terminal in Brooklyn. Credit: Corey Sipkin

Then, when shipments come in, truck drivers have to make reservations to pick up the goods at the port, Torkos said. "And when they get there, they just sit and wait," she said.

The Port of New York and New Jersey saw an 18.5% increase in overall cargo last year from 2020, and a spike continues this year with an 11.7% increase in cargo year-to-date, compared to the same period as last year, according to Rooney and Port Authority figures. Data shows there was a 12.7% increase in imported cargo volumes in March compared with March 2021. April figures were not yet available.

Rooney acknowledged that "the shutdown in China is going to create this hockey-stick-type growth,” but is hopeful everyone will be able to keep up.

“It all depends on what happens with the rest of the supply chain," Rooney said. "If, all of a sudden, large numbers of shippers decide to move much higher volumes through the Port of NY & NJ and everything downstream from the port doesn’t have the capacity to handle that, then [a backlog] is certainly possible. But we’ve been working with the entire supply chain to make sure that doesn’t happen.”

Simon Heaney, senior manager of container research at Drewry, a maritime research firm in London, said factories in Shanghai are operating at 20% capacity. When the factories begin running at full capacity, a surge in production could threaten to overwhelm the shipping and logistics system.

“The problem with the supply chain isn’t necessarily the amounts of volume it carries. It needs predictable flow. If it comes in peaks, that’s when the problem starts,” Heaney said in an interview.

8-10 days The average time containers sit at the ports, compared to 3-4 days last year.

Torkos said she has heeded the advice of her customs broker and is gearing up for another distribution slowdown. She relies on titanium, resins, glass beads and castor oil, which are mainly produced overseas, to concoct her formula of thermoplastic. Prime time for Torkos is June through August, when she hires extra staff to keep up with demand.

“It is important that we make sure we have our supplies coming,” Torkos said. “It’s like baking a cake: If you run out of eggs, you can’t make that cake. We are keeping our fingers crossed that our containers are on time."

Other businesses also are adjusting.

Cindy Roth, founder of All About Cats Rescue in Freeport, said her group houses about 70 cats and has been stockpiling cat food because canned kitten food is harder to come by.

"I deal with wholesalers and some stores," she said. "I used to be able to pick up the phone and make a call and get a delivery in two days. Now, sometimes it can take a week or two. There is a lot of planning."

Lady Garcia, 36, general manager of Tropical Smoothie Café in Bay Shore, said several weeks ago that she was unable to get blueberries. Before that, it was pineapples. That meant altering the menu.

"For a place like us, we focus on healthy eating and high-quality fast foods, but after coming out of a pandemic, business has been rough," Garcia said. "We’re still facing a lack of products, and we don’t know when it’s going to get better."

Transportation costs are the most expensive part of operating a business, accounting for nearly 20% of a company’s overall operating costs, said John Costanzo, CEO of the consulting firm LDK Global Logistics in East Norwich.

$11,200  The cost of a 40-foot dry shipping container from Shanghai to NY, in April. That's up from $2,700 in 2019.

The cost of shipping goods in containers is the highest the market has seen, Heaney said. The cost of shipping containers from Shanghai, the world's biggest container seaport, to New York has tripled since 2019. A 40-foot dry container was roughly $2,700 in 2019. The price had jumped to $11,200 by April 28.

Containers stacked like Lego blocks at the terminals are crowding the facilities for nearly double the length of time as last year. Containers idle for an average of eight to 10 days at the ports compared with an average of three to four days last year, Rooney said.

It’s not unheard of for some containers to jam the terminal for several months because of a warehousing shortage, simple mismanagement and lack of space on vessels to take back empty containers, shipping industry experts said.

Fees are tacked on when containers aren’t picked up or dropped off within a specified time frame. Torkos said she once incurred thousands of dollars in fees when a container went missing for two weeks. The late charges eventually were dropped, but it took three months of disputes.

Terminals achieve optimal service level at 80% capacity, but some are functioning at more than 100% capacity, leading to snarl-ups, as workers spend more time sorting through boxes and truckers take longer to access their cargo. Also complicating matters is a scarcity of chassis, the wheeled structures that move containers on to trucks.

“What we need is the end of the supply chain to be able to support what’s coming off the ships. The terminal is not the linchpin, and the bottleneck is elsewhere in the supply chain,” Rooney said.

Dockworkers are diligently working to keep the flow moving, with 580 recent hires and 420 more soon to jump onboard, said John Nardi, president of the New York Shipping Association, which negotiates hiring of dockworkers and represents marine-related businesses at the seaports.

Trailers are used after cargo is unloaded from ships and transferred to trucks at Red Hook Terminal in Brooklyn. Credit: Corey Sipkin

To help speed up the transfer of cargo, some trucking organizations said the terminals should revamp their communications system and extend their hours.

Lisa Yakomin, president of the Association of Bi-State Motor Carriers, which represents more than 170 members in the trucking industry at the Port of New York and New Jersey, acknowledged there's a national trucking shortage impacting long-haul driving. But flooding the terminals with drivers won’t help if they’re not able to get in and out quickly, she said. It just creates long lines outside the gates.

“We need to hire more labor to be able to handle the influx of freight, and we need to also improve the working conditions and reduce the congestion the truck driver experiences. Waiting four hours to move one container that typically takes one hour is frustrating for us and causes delays,” said Yakomin, adding that truck drivers get paid as they wait.

Darrell Cheng, owner of Canaan Xpress, a midsized trucking company based in Valley Stream, said one of his drivers recently spent six hours at a terminal only to be kicked out empty-handed when the gates closed.

“Seventy-five percent of transactions go fine. The other 25 percent are a huge clog. It’s just disarray. These terminals and steamship lines basically make it very difficult to get in touch with someone to tell you what’s going on,” Cheng said.

“All these inefficiencies result in additional fees, congestion, pollution, and, frankly, it’s unnecessary. At the end, we have to charge the customer, we absorb some of it and work something out, and everyone has to pass the cost along to everybody else. You can’t blame all of it on circumstance because the people that are suffering are my driver, and my business, and the consumer.”

Salvatore Stile, a licensed broker, importer and president of Alba Wheels Up, a logistics company with an office in Valley Stream, has been forecasting a “tsunami of goods" at the ports this summer.

“I think there is going to be a severe infusion of freight, and I don’t know if the system will be able to handle it. I don’t know that the truckers will be able to handle it and have the necessary equipment,” he said. “This will turn into a tremendous challenge for importers and logistics.”

Meanwhile, Red Hook Terminals in Brooklyn, one of the smaller container facilities, is operating without delays by extending gate hours and implementing new technology to streamline container movement and "keep the velocity up," said Tom Griffith, executive vice president of the terminal.

The terminal does not accept more business than it can handle. 

“The way I explain it to friends and family, a marine terminal is like a restaurant: You need to turn your tables as many times as possible,” Griffith said. 

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