A little while ago, we tackled the question, “Why is the supply chain so messed up?”
Despite efforts from local officials, California Governor Gavin Newsom, and even President Joe Biden’s administration, there’s still significant congestion at the Ports of Los Angeles and Long Beach. For our part, we’ve been hearing from a number of shippers looking for drayage solutions to get their containers out of the ports.
A few key statistics lay out the current state of affairs:
82% increase in average end-to-end transit time from China to the U.S.
Due in large part to port congestion, U.S.–China ocean freight transit time has increased considerably, with significant impacts for U.S. retailers. In July 2020, the average end-to-end transit time was 44 days. By July 2021, it was at 70. By December 2021, it hit 80 days, making for an 82% total increase from July 2020 to December 2021.
$238 B in cargo delayed from 11/21-01/22
To give you a sense of just how much cargo was impacted, logistics technology company project44 estimated that $238 billion of freight was held up outside the Ports of Los Angeles and Long Beach between November and January 2021.
Finally, as of mid-January, the Daily Breeze reported a backup of 104 container ships outside the ports.
Is there any relief in sight? At a recent press conference, Mario Cordero, Executive Director of the Port of Long Beach, predicted that ripple effects would persist for several more months to come. “You’ll see some normalcy in the supply chain, in my opinion, summer of 2022,” he was quoted as saying.
So What’s Behind These Delays?
We touched on a number of them in our other article on the recent supply chain challenges. However, some noteworthy hurdles have continued to hinder progress at the twin ports.
Gene Seroka, executive director of the Port of Los Angeles, compared solving these issues to “a game of Whac-a-Mole. We try to get after one issue and then two or three more pop up,” he said in an ABC News article.
In other words, as many who work in the industry understand, a smooth supply chain relies on a number of interdependent elements working in concert. When one element gets out of alignment, it affects all the others, sometimes in unexpected ways.
That’s part of what happened at the Ports of Los Angeles and Long Beach.
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Element #1: Truck Drivers
A number of people want to point to the truck driver shortage as a root cause of the port backups. According to statistics from the American Trucking Associations (ATA), the industry is facing a shortage of 80,000 drivers.
However, that statistic doesn’t tell the whole story. Some truck drivers report showing up to the ports, only to wait anywhere from three to eight hours to get inside to pick up a container—so long that they sometimes miss their next appointment. Others report being simply turned away.
What’s causing these difficulties? A few other elements in the complex supply chain web.
Element #2: Container Congestion at the Ports
A few months ago, fears circulated of a potential container shortage. The Ports of Los Angeles and Long Beach ended up with the opposite problem. For many weeks, the ports were jam-packed with containers full of cargo. These containers made operations challenging by restricting both room to maneuver and the ports’ abilities to accept new containers.
In response, in October 2021, the ports threatened to implement dwell fees for containers that sat on the docks too long. Containers set to leave via truck were offered a nine-day grace period before fines would begin. Those moving by rail would have only three. Fees were announced at $100 per container, increasing in $100 increments per container per day.
Although the implementation of the fees were delayed until at least January 21, the mere threat seemed to have an effect. Since the announcement of the fee schedule, aging cargo on the docks was reduced by 55%.
The ports also announced their intention to charge similar penalties for empty containers, which have also plagued the ports. Although they have deferred the plan for now, port authorities believe that their announcements have at least kick-started industry talks for solving these problems.
However, all of these hiccups had ripple effects.
Element #3: The Chassis Challenge
Getting container chassis where they’re needed has been a problem for several months now, and it certainly became an issue at the Ports of Los Angeles and Long Beach.
The backlog of empty containers mentioned above resulted in terminals refusing to accept empties. Add to that a zoning provision in Long Beach that prevented stacking of empty containers more than two high on private property, and there were a number of chassis sitting around with empty containers on them. Consequently, there were very few empty chassis available to pick up containers at the port. You can probably see where this is going: Containers containing cargo continued to stack up at the ports with no empty chassis to pick them up.
The chassis-stacking rule in Long Beach was relaxed in late October for 90 days to help alleviate congestion. Although officials say that it’s begun to ease, the backlog is far from cleared.
Element #4: The Omicron Variant
Finally, we have the direct effect from the COVID-19 virus itself.
As Omicron cases climbed around the U.S., dockworkers weren’t immune from its effects. 1,200 workers on West Coast ports tested positive from January 1–10, 80% of whom were in Southern California. On January 13 alone, 800 workers were absent from work, recuperating from illness, quarantining, or awaiting test results.
In other words, just as many other industries have seen their workforces decimated by sick or quarantined employees, the same has been true for logistics and freight. As the coronavirus pandemic continues to unfold, supply chain operations will continue to be affected by workers taking sick days or quarantining.
Are Port Delays Impacting Your Operation?
Officials at the local, state, and national levels are all working on clearing the backlog at the Ports of Los Angeles and Long Beach. However, due to the interdependent nature of the supply chain—and the complexity of the problems—solutions aren’t simple, and they won’t be instant.
However, if you have a container stuck in the Ports of Los Angeles or Long Beach, our experts can help. Get in touch with us to discuss immediate solutions for getting your container released. We’ve already helped many of our customers get their goods moving again, and we’d be happy to help you.
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