With U.S. ports clogged, Japanese exports take pricier Mexico route
Faced with chronic congestion at ports on the U.S. West Coast, Japanese shipping lines have rerouted more American-bound cargo through Mexico — in some cases double the previous level.
Nippon Express has taken this route since August, sending ships to Mexico and transferring freight onto trucks there for ground transport to U.S. states such as Ohio and Tennessee.
Pandemic-induced shortages of longshore workers and truck drivers have left U.S. West Coast ports struggling to cope with rising volumes of shipments of both industrial and consumer goods from Asia. The Port of Los Angeles reported its busiest January on record.
Mexico has emerged as an alternative path for goods from Asia. Nippon Express sent 40 twenty-foot equivalent units this way from November to January, twice the total for the preceding three months.
Shipping to the Midwest this way takes at least 35 days or so.
“Going through the U.S. West Coast took 25 days or so before the coronavirus, but now it’s around 60,” a Nippon Express representative said. “The detour is faster.”
Auto parts are being sent along this alternative route as carmakers ramp up production again, scrambling for components after chip shortages.
Shipping through Mexico can be three times as expensive as going through West Coast ports, but many companies appear to have prioritized delivery time over cost. Appliances also are going along this path.
Container shipment volume between Asia and Latin America was up 33% at the end of 2021 compared with a year earlier, rising faster than the 16% increase for freight traveling between Asia and North America, Japanese shipper Nippon Yusen said.
With contracts of West Coast dockworkers set to expire this summer, the shipping industry fears a possible repeat of the months of delays that accompanied the previous round of negotiations in 2014.