Now that the ports of Los Angeles and Long Beach have moved to 24/7 operations, pressure is mounting to reduce the backlog of ships at anchor in San Pedro Bay.
But more coordination will be required among the links in the Southern California supply chain before that can happen. And with 25 more container ships filled with holiday inventory from Asia scheduled to anchor within the next three days, results have to come fast.
As part of the ports’ new 24/7 operating plan, instead of waiting for cargo owners to pick up their cargo when they are ready – a “pull system” – the ports are using a “push system” to identify cargo owners and get commitments from them to pick up their containers.
“It also means getting commitments from the liner shipping companies to have an equal number of exports and empty containers returned to give truckers the round-trip economics they need and reduce gate turn times,” said Port of Los Angeles Executive Director Gene Seroka at a press conference on Thursday.
“In effect, if we can continue to push out this cargo like we’ve shown in early days with our rail partners on the trucking side, that will give us more room on the terminal to bring in these ships even quicker.”
Seroka would not give a forecast as to when the current number of ships at anchor – 62 on Thursday, compared to a record-high 73 last month – will be reduced to the normal handful. However, he noted that import volume may plateau after the Thanksgiving holiday, providing an opportunity to make a dent in the backlog.
“Most retailers are telling me that following the [early February] Lunar New Year holiday [in China], we’ll see the second quarter of 2022 focused on replenishment of inventory at the store and distribution facilities level,” he said. “It’s incumbent upon us to squeeze every minute and hour of productivity out. The more cargo we can get out the gates via truck and rail leaves more room to get that next ship in. Our goal continues to be to chip down at that number of container ships at anchor every day.”
Port truckers struggling
Many of the 18,000 truck drivers who haul the containers in and out of the ports and adjacent container yards are not yet convinced of the potential of the ports’ 24/7 push system. Commenting on the plan at the Port of Los Angeles, announced on Wednesday by President Biden, the Harbor Trucking Association, which represents drayage truckers, said alleviating the congestion and reducing ship backlogs will not be accomplished merely by moving to 24/7 operations.
“It should be noted that thousands of empty containers sitting in motor carrier yards on top of chassis are unable to be returned into the port complex because of overly restrictive appointment requirements,” the association said in a statement on Wednesday.
“For instance, if truckers can’t secure an appointment to return an empty container, they can’t free up the chassis to move an import off dock, so those appointments go unused. Furthermore, if truckers cannot count on consistent skilled staffing levels during the second half of the second shift on top of the empty return restrictions, those appointments go unused.”
Todd Spencer, president and CEO of the Owner-Operator Independent Drivers Association, said truckers have already been operating around the clock “but are often restricted by factors beyond their control, such as excessive detention time and the lack of readily available, safe parking for their trucks.”
“These problems must finally be addressed if the administration hopes to implement any significant supply chain solutions. It’s not realistic to expect the supply chain will suddenly operate efficiently on a 24/7 schedule when drivers aren’t being fully paid for their time.”
Major export lag
Despite the backlog of ships waiting to get into the port with overseas imports, the port recorded its best September in its 114-year history, Seroka confirmed, with total container volume of approximately 900,000 TEUs driven by high consumer demand.
At the same time, however, exports at the port were at record lows. Outbound loaded containers at the port fell to 76,000 TEUs, a 42% drop compared to last year and the lowest since 2002. The ratio of imports to exports came in at a high of 6:1, the widest monthly gap recorded at the port.
“This is obviously an area of great concern, and we’ve talked about this at the federal state and local level,” Seroka said. “We have to create policy and incentives to get our American exporters back in the game.”
Rolling out 24/7 nationwide
John Porcari, who is coordinating the move to 24/7 operations as port envoy to Biden’s Supply Chain Disruptions Task Force, said that getting major big-box retailers to commit to 24/7 operations for at least the next 90 days represents the other half of the solution to clearing out the ports. He believes the change represents a “nationwide” opportunity.
“It’s been clear over the last couple of weeks that as a nation, we have to move to a 24/7 supply chain,” Porcari said during the press conference. “The ports of Los Angeles and Long Beach are doing it at their end, cargo owners are doing it at theirs, and now need to energize the rest of the system.”
One of the keys to accomplishing that goal, he said, is secure data sharing – something that has so far eluded the industry.
“In private discussions with CEOs throughout the supply chain, they admit we need better, more transparent data on a national basis,” Porcari said. “You can’t fix what you can’t measure, and we need to move toward that. The guiding principles of an open-architecture system of transparency, real time data, and protecting proprietary data can all be achieved.”