Ginny provided an excellent link to a discussion about the port mess on the West Coast. I read the entire (long) thing and the comments and had a few things to add here.
I doubt that some guy (although he is a logistics company CEO) could rent a boat, put out a few tweets and change a municipal rule. It isn’t like the guy has millions upon millions of followers. I suppose it could have happened but sounds doubtful (8 hours is what it took). And while it is great that they can stack containers higher, that isn’t going to solve the overall problem.
As many others (including me) have pointed out the problem didn’t happen overnight and won’t be fixed overnight. The problem needs a team of people to come up with a game plan that is realistic, and a bunch of rules will need to be changed if the issue is going to be fixed. Mayor Pete is clearly underqualified and probably doesn’t care, as evidenced by his extended time off to play mom. While taking time off to take care of a child in and of itself isn’t a bad thing, taking off so long is, of course, ridiculous and a bad look. Full disclosure – when my wife bore my two children I think I took off one or two days for each.
I have said before that there needs to be a Port Team, or something on the federal level and they need to get with the state and local governments as well as the unions and fix the archaic rules that everyone is playing under, and come up with some out of the box solutions. I figure this would take the team around a month to come up with, and I would involve everyone, including the army logistics people, or anyone else I could think of to help.
This will not happen.
So, back to reality. In the world of industrial distribution, things are somewhat like they have been for the past year and a half. Anything imported is completely crazy and unpredictable as to when it will arrive. Everyone is more accepting of substitutes, as sometimes there is no choice – and many times the substitutes are much more expensive. But if the choice is “heat” or “no heat”, it makes things easier. Winter will have no mercy on facilities or homes that don’t have parts or units that work to keep them thawed. I get very little time off, but I have no choice right now as we need stuff and I have to do whatever it takes to get it.
There are some holes in the inventory but nothing too tragic, with the notable exception of imported finished goods such as ductless mini split systems, all of which are made “over there”. That industry is pretty much tanked. Domestically made products are doing much better, although the continuing labor shortages and problems with getting certain raw materials such as plastics and foam (we really didn’t need that Texas freeze on top of all of this) hurt lead times.
It is still pretty wild with some things, but overall, it isn’t the end of the world unless you are relying on imported stuff. LTL continues to be a major issue and I expect problems with food chain eventually. We need autonomous trucks and fast.
32 thoughts on “Unpacking the Port Part Two”
Article on recruiting new drivers:
David, I looked at the article to see if it included owner-drivers and it does. That seems to be a significant factor in the POLA and POLB backups. California passed AB 5 a couple of years ago which banned independent workers, like “gig workers.” The intent was make everyone into a union member and an employee. My understanding is that owner-drivers are not allowed into port facilities to pick up containers. I have spent a lot of time around the harbors of LA and Long Beach and have seen containers stacked higher than two. Maybe that is a new rule.
Congress repealing the Jones Act would be an enormous help as well, as shipping traffic is severely restricted by the domestic ownership requirements. Eliminating those kinds of restrictions would go a long way to add needed flexibility into the total logistics space.
There are better sources than the following, but this gives a quick primer on the issues:
Apparently there is a rail line from PoLB to Utah, run by Union Pacific, that is under used. It has port capacity and customs, etc. The two port directors came up with this. Containers could be loaded directly onto the rail lines and processed OUTSIDE of California as required. Adjusting the schedule and increasing the number of available cars for the purpose would relieve congestion and process the contents of the containers. I am sure that the current administration will be able to find a security issue to ensure this doesn’t happen.
Apparently they have been building a mega-container port in Mexico since… 2012?
A crisis that has been years in the making:
“How Government Stands in the Way of Infrastructure Improvements” By Dominic Pino | October 28, 2021
“Since 2005, BNSF has been willing to spend millions to make port operations at Los Angeles/Long Beach more efficient. It’s been stuck in a regulatory quagmire.”
“his extended time off to play mom”
Taxpayer underwritten parental leave is part of the Democratic plan. Perhaps the Biden people thought Junior’s summer vacation would play well politically with female swing voters.
I challenge everyone here to name one crisis in the last 60 years that wasn’t caused by government and then compounded by government.
Hurricane Katrina was not caused by government but local corruption contributed a lot as money for levees was spent on parking lots for casinos mounted on barges. MRGO was a contributing factor, as well.
Mississippi River Gulf Outlet.
The promised economic development along the 76 mile channel in poverty-stricken St. Bernard Parish has yet to materialize. What the MRGO has delivered is an $8-plus million yearly maintenance plan for commercial and recreational waterborne traffic. The nearly $1 billion price tag for the less than two large container ships a day that use the channel is baffling, especially considering that the channel only shaved 37 miles off the original route.
Prior to Hurricane Katrina, environmentalists and others, including voters in St. Bernard Parish whom the canal was intended to help, called for its closure.
Criticism intensified following the hurricane, when engineers implicated the MRGO in the failure of levees and flood-walls protecting large parts of Greater New Orleans. MRGO was derisively termed a “Hurricane Highway” in Katrina’s wake, due to its apparent role in amplifying the impacts of storm surges.
Surely after the justice department and the FBI got done bringing the various miscreants to justice, such a thing could never happen again.
Never mind, wait til next time, maybe we’ll be lucky enough that it will happen in a Republican governed area. Then you’ll see.
The 2-level stacking limit seems to be a real restriction but one imposed only by a city government on truck yards apart from the main port arena. Yes, lifting the restriction helped. No, it’s not THE magic bullet. But, it’s an example of bottlenecks to be overcome by leadership and carefully temporary executive fiat.
Restrictions on rebuilt truck-tractors or “Gliders” are (by definition) restricting the resources available. Imposed to improve air quality, the rule might be temporarily waived.
Over-the-road drivers are, usually and properly, licensed differently than “yard dogs” who drive tractors to move containers-on-chassis from one parking spot to another parking spot within a confined area. During this period of extreme congestion it might be useful to temporarily allow yard dogs to drive farther and between “parking lots”, especially in getting empty containers back to the correct owners.
Since there is a glut of empties at port, we might temporarily indemnify receivers (away from the port) from detention charges on those empties. Let ’em stack up in lots of little lots, inland.
I’m sure there are lots of better ideas targeted at other minor regulations, any of which at are present bottlenecking the pipeline. We should all discuss.
There needs to be a Port Team lead by a qualified experienced leader. Mayor Pete doesn’t even come close to that description and worse he would have no idea how to identify and recruit that individual, even though the US candidate pool is probably in the thousands.
The Biden administration is impotent.
Fiona…looks like this is actually being done: Expanded rail capacity Long Beach >> intermodal railyard in Salt Lake City:
…not clear why this wasn’t being done previously; I would have thought UPRR would have been selling this service very aggressively.
There is a very interesting article by a truck driver over at medium.com. also linked on Zerohedge. (What! You expect people to listen to a ,,, truck driver? Does he have a degree from Harvard? What would a truck driver know about transportation? )
There are many links in the transportation chain, and many (many!) regulations throwing sand in the gears. If someone did something dumb — say, like making ports operate 24 hours per day — it simply clogs up some of the other links in the chain.
If the situation deteriorates, there would be only one fast answer — temporarily suspend ALL regulations, and maybe even suspend contracts. Let creativity and profit-seeking have free reign. You know, a supply chain total freeze-up might become the turning point in rolling back the over-regulated mess which the Political Class has created. Silver lining!
All successful businesses depend on the good will of their employees. They need them to work an extra hour, or whatever to keep things going smoothly. One of the surest signs of a failing business is when this willingness is absent.
Oddly, it seems that telling a third of them that your going to fire them unless they give up the right to determine their own medical treatment has a negative impact on this good will. Whether they’re vaccinated or not, the impositions of the last 18 months have pushed us as far as we’re willing to go. Tomorrow, New York City will have thousands less police and firemen, 24,000 workers in all. Some of them, at least, will be missed.
Independent truckers, I’m related to several, are paid by the mile. Even if they get some sort of pay for waiting for loading and unloading, it’s a fraction of what they get for running. A driver confronted with a long wait to load will often just drive away to find another load, Take too long to unload and you’ll have to find another driver for the next load and you’d better believe they’ll tell everyone they can to avoid you. The internet is a really good way. There are lots and lots of boards devoted to nothing else.
The ports are run by local governments in one of the most regulation bound states in the Union. What exactly do you expect? That they’d manage these any better than the DMV?
@Gavin and MCS – you both hit on exactly what my fictitious Port Team would do – look at the entire problem, see it’s many facets and do whatever would be necessary to fix it, whether that is suspending certain archaic rules or dumb union regs or whatever it may be. Again, this will not happen, but is, in reality, what it would take to fix the problem. Meantime, people will suffer.
“exactly what my fictitious Port Team would do – look at the entire problem, see it’s many facets and do whatever would be necessary to fix it, whether that is suspending certain archaic rules or dumb union regs or whatever it may be.”
Is it a top-down solvable problem? Seems unlikely to me. I’m by no means an expert in any of this, but I’d bet that the “Port Team” would need to have a remit to take things out that have broken the system, not to put things in…
Seems to me it’s similar to the way that towns and cities grow by the little contributions of hundreds and thousands of people, and then someone comes in with a master plan a la “urban renewal” and completely destroys everything. You can’t manage and control complex systems like that, you can only destroy them.
Every indication I see is that the food distribution system is stressed to the point of imminent breakdown, because it’s been managed and consolidated and regulated to the point of non-functionality. And of course when we get the inflation and shortages that it seems like we may get, the “answer” is going to be more and more of what has screwed things up, i.e. more and more Mayor Pete and Liz Warren highly educated idiots in charge.
@Brian – it would indeed be a super interesting thing to see what it takes for pumpkin in a can (as an example) to get from the field (wherever that may be) to the store shelf. And I agree the food distribution system is in for some stressors pretty soon here. But maybe the rage that it will bring might get something fixed. Most people don’t really care about industrial distribution items (even though they should) but they ALL care about not having their normal foodstuffs available.
Dan, politicians know how to get elected. It is rare to see a politician who has ever done anything else. Solving problems in industries like transportation and shipping by sea must be a very rare skill in politicians. I, being old, remember an example with the earthquake in California in 1994. It was very destructive. Pete Wilson was Governor, the last Republican Governor (Arnie doesn’t count). To rebuild infrastructure, like freeways, Wilson used an incentive plan including bonuses for performance. Reconstruction was completed ahead of schedule.
Meanwhile, Caltrans turned its attention to reconstruction of the freeways. Normally the process of awarding a contract to build a major structure takes many weeks. A contract is advertised and prospective contractors pick up bid packages and submit their proposals. At a scheduled date, the bids are opened and the lowest qualified bidder is selected for the job. Then a process of reviewing the winning bid, and finally approving it, takes place. But normal rules were thrown out the window for the Northridge earthquake. Governor Pete Wilson signed an Emergency Declaration allowing Caltrans to streamline its contracting procedures.
Another important feature of the contracts was the incentive/disincentive. If the winning contractor finished the job early, a bonus was awarded for each day that the deadline was beaten. Conversely, for every day over the deadline, the contractor would be penalized the same amount. The amount varied depending upon the importance of the route. This proved to be a powerful motivation for contractors working on the job.
The take home lesson ? Democrats can’t do it. Roosevelt got Republican industrialists to fix the WWII production troubles. This Democrat Party will not do that.
If we were waiting for the government to fix it, we would all have starved to death many years ago. Thankfully,we don’t have to.
First: very little of what we eat is imported and a lot of what is, is grown in Mexico and brought in over the border. The imported stuff is mostly out of season fruit and vegetables. Things like very expensive strawberries in January aren’t an existential crisis.
Second: Like Dan, every manager in the food chain is going to work to bypass the problems. It probably won’t be perfect or cheap but I don’t see starvation immanently.
An extra $0.50 a mile will do wonders for finding trucks.
A lot of the empty container that aren’t making it back to China would have carried food of various kinds. China’s situation is much more critical. China is some little ways from being able to feed themselves.
The issue with food isn’t it being imported. It’s that stuff gets moved over long distances, processed in regional/national locations, then shipped all over the country. So there isn’t the import bottleneck, but there are plenty of transportation and processing hubs that could freeze up the whole system. And regulations are stupid–I live in a very rural area, and at area farmer’s markets, the meat I can buy from local farmers comes from their animals that are shipped to a slaughterhouse in a different state, processed, frozen, shipped back, then sold to me “locally” because that’s what the law requires. And no one said anything about anyone starving, the issue is going to be prices skyrocketing and stuff being unavailable.
So you see, the system works. Money makes the world go round, more money makes it go faster.
It works until it doesn’t.
On the other hand, don’t underestimate Joe’s ability to F#$! things up. You want to see a bunch of trucks parked, just try to make rates “fair”. The same for all levels of the supply chain.
I’ve already noted comments from the titan haired font of prevarication that I interpret as trial balloons for some sort of price controls. Anybody selling the stupidity of the Biden maladministration short is crazy.
Fiona and Dan:
The Salt Lake City idea has been in the works for a few years — and is the target of all manner of whackadoodle opposition. Google “Salt Lake City Inland Port” for stories about ridiculous protests and hostile activists.
Utah is a relatively sane, and predominantly conservative, state; but Salt Lake City is a hard-core-blue city controlled by deeply entrenched Democratic party machine.
Just a note to thank you for not suggesting the appointment of a Port Czar.
Since California love them some lockdowns, lockdown the area around LA. Close interstate highways on two routes, one going north, one going east…out to large temporary load/off load sites outside of the Metro area. Deploy US Army troops armed and carrying live loads to close off and patrol the routes and guard the temporary facilities. Interfere and die.
Here’s what a rail oriented port looks like:
It may take more than this, notice where each 2 mile train carries 350 containers. A single ship might carry more than 10,000. They all may not be destined to the same port, but it gives an idea of the scale that’s necessary. There are (as of 11/13) 83 ships in line for POLA and POLB, the average wait time is 16.9 days.
MCS…”It may take more than this, notice where each 2 mile train carries 350 containers. A single ship might carry more than 10,000″…that really puts the problem in perspective!
Looks like the Port of Savannah is doing a pretty good job, compared with others. There’s a lot of information available at their website, including a performance dashboard and a set of route maps.
Seems to me that the New Normal will be that businesses need to expect significantly longer delays for imports via ocean shipment…considering the ocean transport and port delays and the rail and truck land transport, as well as internal delays at the source country…than they have been used to and expecting in the past. Implications are higher carrying costs for the in-transit inventory, more difficult forecasting to meet customer demand, and increased obsolescence risks for things like fashion products and consumer electronics products. Some relatively high-value products may find air freight to now be a better deal, and American manufacturing will become more relatively attractive.
The real question is; how long will this surge last? The ports were busy pre-covid but not overloaded and I expect the flow to return to normal some time soon. The same site, in another post, reports that the record high freight rates and premiums have already declined about 23% in anticipation of the slow season that is starting. So all this was probably only going to be a problem for a short time anyway. Expect this to be scored as a major win for President Depends.
The problem ain’t going away. People will adapt to the “new normal”, but the problem is still going to be there, and that problem isn’t actually what most of the pundits say it is.
Biggest issue with the ports in California? California.
California, at this point, is a failed state. They are coasting along on the fat accumulated by generations before this one, and are eventually going to run out of resources to support “stupid”. They’ve driven out much of the industrial base they had, and all that remains is stuff that is going to evaporate as the end-stage of life begins; how some of the various tech corporations are managing to recruit and retain people when they have only San Francisco to offer up as “where to live” is a wonder to me.
What I expect is that California is going to crash, and go into what amounts to Federal receivership; you’ll see the ports in Los Angeles and Long Beach become Federal enclaves, along with the shipping corridors out of them. The major cities are going to be Detroit-like wastelands, filled with the dysfunctionals they’ve bred up and supported. All the things that once made California attractive are actively being pissed away by the “enlightened”, and it won’t end well for anyone. Just like Seattle and Portland, it’s been a choice. And, they chose poorly…
Sad to observe. I remember California when it was more-or-less functional; it was a great place to live, even if the climate wasn’t to my taste.
The ports seem to have blinked when it came to charging shippers because they couldn’t move containers out of the port fast enough:
Biden has picked a former mayor of New Orleans to handle the port “infrastructure” money, apparently no body named Gotti wanted the job:
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