What Bathtubs Can Teach Us About Supply Chain Bottlenecks

The latest news that the Port of Charleston, South Carolina has a queue of 31 ships waiting to unload highlights a bottleneck that has thrown supply chains into turmoil over the last two years. Container terminals, especially those in the ports of Los Angeles/Long Beach but now increasingly East Coast ports, have received a lot of attention because they have been overwhelmed by import volumes. One way to understand the struggles that the terminal operators face is to use the analogy of a bathtub.

Imagine you have a standard bathtub – which typically holds 80 gallons of water – and you have a faucet that is filling it and a drain that empties it. One thing you don’t want to do is fill it past the top (assume for the moment that the tub has no overflow drain). If the drain is wide open, you can bring pour water in on average as fast as it drains out. If the drain gets clogged, you may have to fill it slower or pause occasionally so that you don’t overflow the tub rim. If the water keeps coming, you might start filling buckets by the side, just so you don’t spill water all over the floor. But eventually if things get bad, you have to stop the incoming water. The tub is just a buffer that holds the water until you have some place to put it (down the drain or into buckets). When the tub gets full, it gets harder to manage the water without splashing and generally making a mess.

Container terminals have yards, and those yards are their buffers. They unload import containers  from ships into the yard stack, where they wait to get picked up by truckers, or get put on intermodal trains. Like a bathtub, the drain rate is governed by how fast you can get truckers in, matched to the containers they are supposed to pick up, and out. It’s a little more complicated, because if you have thousands of containers that just came off a ship, you stack them in layers in the yard, generally five or six high. When the trucker arrives, you hope the container is on the top or near the front of the stack, but more often you have to do rehandles, which means moving the containers that are in the way first. As you can imagine, if you get a lot of containers in the stack and you have limited space to move them around, rehandles get harder. That’s like splashing around in the tub and making a general mess of things.

Meanwhile if the destination for your container, say it’s a distribution center, is overcrowded or full, that means you don’t have anywhere to take it. That corresponds to clogging the drain of your bathtub. What many shippers do is they leave the container in the yard and delay picking it up. Leave the water in the tub since the drain is clogged. But now the tub is filled to overflowing, so you have to stop the water that’s still coming in. For container terminals, that corresponds to slowing down the rate at which you unload the ships (increased ship “dwell time”), or not even offering them a berth and making them wait out at sea.

Some of the terminals have established “pop-up” yards to accommodate overflowing containers. That’s like the buckets you were using to catch the overflow from the tub. Those are just more buffers; eventually you have to deal with those containers too. Some major importers were more clever during the pre-holiday crush. Walmart established pop-up yards where they could “peel off” inbound containers from the congested terminals and then deal with them on their own terms.

An additional layer of complication is what to do with all the empty containers. Since the U.S. has so much more containerized import volume than export, there’s a large imbalance. That’s just more confusion and splashing around in the tub, as the terminals have to get the empties in and evacuated on ships who are already running late and may not have a lot of time to take them on.

Making ships wait off shore is like shutting off the water to the tub, or at least slowing it down. That reduces the effective capacity of the pipe that is bringing in the water, just like the ships waiting offshore effectively reduced global shipping capacity. Even though the global fleet capacity for containers grew substantially in 2021, the ships waiting problem ended up reducing capacity in global trade lanes by an estimated 12%. Bigger pipe, but a turned down faucet means I’m still not moving as much water as I could. See what a clogged drain can do?

Two years ago I wrote a piece on what toilet paper can teach us about supply chains. That caused many people to think I was an expert in toilet paper, which I am not. By the same token, I am not an expert in plumbing fixtures, but the next time you are sitting in your bathtub, I hope you will remember this article and contemplate the effect of clogged “drains” on global supply chains.