(Zerohedge) – Written by Lori Ann LaRocco, author of: “Trade War: Containers Don’t Lie, Navigating the Bluster” (Marine Money Inc., 2019) “Dynasties of the Sea: The Untold Stories of the Postwar Shipping Pioneers” (Marine Money Inc., 2018). First published on FreightWaves
When you tear away the frills of President Biden’s supply chain announcement, it is essentially a political pawn to push the infrastructure bill. The ugly truth is the congestion will not be alleviated anytime soon and it will definitely not be any better in the next 90 days. Why?
It’s common sense and math.
You can’t blame private-sector companies for this plan’s future letdown. Trade takes people and coordination among all the players within the supply chain. The ports and all of the stakeholders within these ports must be on the same page when it comes to a 24/7 operation.
The holes in this announcement are numerous.
First, 3,500 additional containers moved in a week is 200 containers a day. During the month of August, the San Pedro Bay ports moved 1,241,896 TEUs. This projection of 3,500 does not move the needle at all. That’s a mere 14,000 containers – which translates into just 1% of the total TEUs. This plan is being called a “sprint.”
Biden’s announcement of 24/7 ports is not accurate. Only one terminal out of the 12 in San Pedro is operating 24 hours a day – Total Terminals International (TTI) at the Port of Long Beach – and that every-second schedule is only Monday through Thursday, making it a 24/4 situation, not 24/7.
A Port of Long Beach official said discussions were taking place with other terminals. But as of now, no other terminals have signed on. In the pursuit of 24/7, you need all the players to make this successful.
The 24/7 operation at the Port of Los Angeles is not even happening. When asked if the port was going 24/7 on Thursday, the day after this announcement, the port press office answered in an email:
“No(t) one marine terminal will go 24/7 tomorrow. This [is] a process to work the details of expanded hours leading to around-the-clock work in the private sector. It will take all private- and public-sector partners to operationalize this. There are no fast levers, but we have more cargo than ever and need to move it safely and securely. Gene [Seroka, executive director] will be meeting with industry associates tomorrow on this. No ETA as of today.”
So the ports as of right now are status quo as it relates to expanded operations.
The reason for this lack of 24/7 is because every facet of the supply chain must be participating in an equal fashion. Truckers are not going to work 24/7 if they can’t pick up containers at a warehouse that is closed. The flow of trade moves when everyone in that flow is working. The question is what can be done to change the behaviors of those in the supply chain to go to 24/7?
This frustration can be read in a press release from the Harbor Trucking Association, which said the Biden administration’s plan did not address the core issues that have been plaguing the supply chain.
The release stated,
“While steamship lines and their marine terminal partners have been pointing the finger at the trucking industry for not utilizing appointments during this crisis, the underlying causes have continued to compound unchecked. Challenges faced by truckers doing business at the ports stem from productivity and efficiency issues that are not alleviated by merely shifting to 24/7 gate operations.”
The HTA said thousands of empty containers currently are sitting in motor carrier yards on top of the chassis, preventing those chassis from moving an import container off the dock.
“So those appointments go unused. … This is not an issue of unwillingness to pick up cargo, the entire supply chain wants this cargo moved. It is instead a tangled web of shifting constraints that impede and discourage participation,” the statement read.
Also in this plan FedEx, UPS and Walmart were mentioned in stepping up in helping alleviate the supply chain.
When asked for specifics, FedEx global media relations responded:
“FedEx Logistics President and CEO Dr. Udo Lange appreciated the opportunity to join other business leaders and the administration to share our expertise and discuss supply chain issues, but we have no other details to share at this time.”
Walmart spokesperson Ashley Nolan said:
“We’ll increase throughput by as much as 50% during the nighttime hours being added at the port.”
At the time of publication, UPS did not respond to comment.
In the sea of faces of those attending this press event, a critical piece of the supply chain was missing – the ocean carriers and the port terminals.
When Transportation Secretary Pete Buttigieg’s office was asked why there was no participation, the response was vague:
“The administration has and will continue to have a regular dialogue with ocean carriers and terminal operators.”
And yet, at least one of those carriers has not been contacted – Hapag-Lloyd, one of the largest ocean shipping lines in the world.
“We have not been approached,” confirmed a company spokesperson.
“Ships are already operating 24/7 whenever possible. The challenge is to get containers off the terminal by truck and rail because the warehouses will not/cannot take deliveries on weekends. It is a lot about shippers’ inability to take delivery of their goods and infrastructure bottlenecks in the U.S.”
The carriers and the terminal operators are key pieces to this puzzle. The terminals are the key segment of the supply chain that not only schedules the truck container pickups and drop-offs, they also request the labor to unload the vessels.
So if this is a 90-day sprint, the U.S. supply chain needs more muscle and a massive shot of adrenaline.