WAHPETON, N.D. — Vineet Saxena welcomed news that the Ever Given, the massive container ship stuck for several days in the Suez Canal, had been freed.
Saxena, executive vice president of supply chain for WCCO Belting in Wahpeton, described the situation as just one of several delivery issues the rubber conveyor belt manufacturer recently faced.
"Nothing could have gone worse than this situation at this moment," he said in an interview Monday, March 29.
WCCO Belting typically receives a shipment of fabric from India every week to 10 days. Saxena said he learned within hours of the ship becoming stuck they had cause for concern.
"It took some time for us to gather information about how many ships had already crossed or how many ships were still stuck. We found out that of five, three had already made it through 24 hours prior to the accident and two were immediately behind this particular vessel," he said.
He had not received a delivery update Monday, but said he expects it will take up to 10 days to clear the backlog of ships.
It is likely that future shipments will also be delayed.
"I have good information that they were holding a few of our mother vessels at the port itself because they wanted to assess the whole situation," he said.
He said the delays will force them to purchase more material from China at considerable expense.
"Unfortunately, we'll have to start pushing more cargo coming from China because that is a different route. It completely avoids the Suez Canal," he said. "Right now, with the tariffs and everything, China is pretty costly for us."
A number of factors have caused delivery delays from China, as well.
Saxena explained that a shipment that would take 21 days to arrive from Shanghai months ago now typically takes 40 to 45 days or longer.
The problem is a backlog of ships at the port in Los Angeles, he said. The backlog is due to shipping container shortages, an increase in import traffic and stay-at-home orders in California due to the coronavirus pandemic.
Because WCCO Belting has inventory, his immediate concern is not a material shortage. He's more worried that all of his shipments will arrive at once.
"All my planning to schedule containers to see shipments come in a particular manner, now it is completely out of my hands and completely out of the shippers' hands, too. Depending on which container leaves first and which container shows up at my door, it's a complete mess out there," he said.
Because the shipment is not lost or damaged, he said, WCCO Belting will solely bear the cost of delays.
Saxena calls what happened in the Suez Canal a "Black Swan" event.
"Nobody anticipated it. No one planned for it. ... They say every day it takes about $9 billion worth of freight through the Suez Canal. That's pretty bad," he said.
North Dakota Commerce Commissioner James Leiman said there will be both winners and losers from the Suez Canal situation. The winners will include North Dakota oil producers.
"Energy prices went up a bit due to transportation uncertainty resulting in better prices for our producers. There is definitely an economically inverse relationship for exporters versus importers, in a sense," he said. "I don't know what the aggregate impact will be, whether it's net positive or net negative."
Because North Dakota has the highest export dependence in the country in terms of its gross state product, Leiman said the state has been working to diversify its transportation and logistics model for several years.
In October, the state launched a pilot project in Minot to bring intermodal rail service to North Dakota. Intermodal service allows producers and processors to directly load containers on rail in Minot to ship to international destinations.
While it will primarily be used in the agriculture industry, Leiman said, it will free up the type of containers necessary for other transports.
While projects like this will help, he acknowledged anyone up and down the supply chain will feel the effects of what recently happened in the Suez Canal.
"The Suez situation will also affect consumers. Yes, our (oil) production might be higher, but you're going to pay more at the pump," he said. "There is this natural winner and loser component we need to look at when we see something like this. I wish it was black and white, but it's not."