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  • OTRI.USA
    20.890
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  • OTVI.USA
    15,485.300
    73.880
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American ShipperNewsTop Stories

Viewpoint: Here’s the truth behind the 24/7 port operations pledge

This 90-day sprint will be a slow walk if key players aren’t on board

This commentary was written by Lori Ann LaRocco. The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.

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.

Lori Ann LaRocco

Lori Ann LaRocco is senior editor of guests for CNBC business news. She coordinates high profile interviews and special multi-million dollar on-location productions for all shows on the network. Her specialty is in politics, working with titans of industry. LaRocco is the 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), “Opportunity Knocking” (Agate Publishing, 2014), “Dynasties of the Sea: The Ships and Entrepreneurs Who Ushered in the Era of Free Trade” (Marine Money, 2012), and “Thriving in the New Economy: Lessons from Today’s Top Business Minds” (Wiley, 2010).

4 Comments

  1. Very well put. There is a saying in the forestry firefighting industry: wildfires make their own wind. Essentially, when a wildfire is large enough, it sucks in so much air from the sides, that that feeds the fire’s expansion. Truly an awful, but all too common phenomenon.

    In shipping, it appears to be similarly multiplicative, now.

    Ships cannot offload
    … because ports are overtaxed
    … because trucks-and-trains to carry away the containers are at-or-over capacity
    … because there has been a backlog of deliveries
    … due to increased consumer demand, and increased manufacturing expectation
    … but in reality, many warehouses are also running WAY behind
    … partially invalidating (i.e. having shipment rejected by customers) pallet delivery flow capacity
    … because of late shipments, but also because of CAPITAL exhaustion
    … itself due to the COVID impact on business, exhausting capital resources
    … combined with banking restrictions limiting access to funds.

    An epic super-storm of influences. IF products are continually delayed in trans-shipping across the oceans, to being stalled in waiting for berth space, to having a slow-down in off-loading due to portside and shipping yard lack-of-capacity, and those in turn having happened as a result of the trucker and train shipping channels being seriously undermanned and at-capacity in other physical senses, well … there is no Biden Administration plan that can unclog the dam. You cannot just ‘announce away’ the logjam, or wish it away. Logjams (for real dams, back in the day when logs were floated down rivers to sawmills) were well known to NEED DYNAMITE in large quantities, and a lot of special action, to get things working again.

    WHAT is the dynamite that the Federal Government can use to unclog the shipping ‘waterways’ of the coastal ports of entry and the cross-country delivery networks which are now hobbled by COVID, Capital and Capacity issues?

    1. Make the longshoreman unions hire more people or at least employ casual labor, trucks are not over taxed they are waiting in the port of Tacoma where I live for 8 hours to have an empty container removed and replace with a full one. They used to put many of the empty containers back on boats to China because the export more to us than we to them. Some genius decided they were too busy to put them back on boats earlier in the pandemic and that move has rippled problems throughout

  2. I think we are seeing the systemic effects of 90% service level impacting the network in a significant ripple effect. Example: If there are 10 crane operators and only 9 show up, then the cranes are 90% efficient. If there are 10 customs agents and only 9 show up, then we are 90% efficient there. If there are 10 drivers and only 9 show up, then we are 90% efficient there.

    Just as we calculate OEE in the manufacturing industry by multiplying yield x rate x utilization to get to a real number in our manufacturing throughput for a plant; expanding the concept across the broader supply chain leaves you with a 90% x 90% x 90% = 73% efficiency.

    For too many years we have been salami slicing capacity and quality in our supply chain in the name of cost cutting efforts to create a high precision machine which cannot tolerate any kind of grit or sand in the gears. Just as the small cuts that Schlitz (https://beerconnoisseur.com/articles/how-milwaukees-famous-beer-became-infamous) did to themselves over the period of a generation; we have done the same and now we are reaping the results.

  3. Everyone is missing the root cause. Too much monetary inflation issued by the Fed to buy up fiscal bonds issued by an insolvent government. Once interest rates rise and wash out all the mal-investment then we can seek to clear bottlenecks. Until then, the bubble keeps blowing and the bottlenecks get tighter. Period. All markets need to revert before this chaos will stop. Think about the price of equipment right now, it’s up 50% if you can get your hands on any. How are truckers going to come online to clear the bottleneck in LA???????? The barrier to entry just doubled in an industry that used to have a very very low bar to enter. $3.5T stimulus is a laughing matter at this point, it just funnels its way into the top layers of the chronies and makes market prices further rise keeping even more folks on the sidelines. Honestly, we are getting what we deserve as Americans. Our inability to stop spending is the cause. You should vote out your local politician immediately.

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