By Lisa Baertlein
LOS ANGELES (Reuters), – Terminal operators, trucking firms, warehouse owners, and importers are beginning to agree with the Port of Los Angeles that they will be moving more cargo into nighttime.
Gene Seroka, Executive Director of the Foundation said that there is not one lever to unlock all the doors.
Tuesday saw the White House gather stakeholders, including Walmart (NYSE 🙂 Home Depot Logistics firms (NYSE:) United Parcel FedEx (NYSE) and Service (NYSE), respectively, and Samsung (KS). They pledged to hire more workers overnight to reduce backups at Los Angeles-Long Beach Port Complex, No. China’s No.1 gateway to trade.
Seroka stated that they are “sustaining every second, hour and centimeter of efficiency from this port.” While most work takes place during the working day, some areas of the operation are available 24/7. White House stated that adding more night shifts will double time available to move cargo. Additionally, union leaders would be aboard.
COVID-19 created demand for consumer goods, while simultaneously closing ports and factories. The shortage of labor, from drivers to warehouse workers, is driving up the price of goods and contributing to product scarcity. This raises alarms over a global supply-chain crisis that could be worsening.
John Porcari (port envoy to the White House Supply Chain Disruptions Task Force) stated that the global supply chain was “craking along” before the pandemic.
He said that the health crisis exposed weaknesses in an unstable global supply chain designed for just-in time cargo flows and predictable freight movements. It is often “your grandfather’s infrastructure” that we are working with.
STRESS AT ALL LINKS
A ranking by IHS Markit, the World Bank and IHS Markit shows that Long Beach and Los Angeles have significantly lower port efficiency than their Chinese competitors.
Port terminals in China usually operate 24/7, many tasks are automated and labor slowdowns are rare, U.S.-based shipping industry consultant Jon Monroe said.
Seroka and Porcari stressed the fact that U.S. supply-chain improvements won’t happen at the flick of a switch. To reduce unintended effects, changes are required at each link.
White House announcement Wednesday will only allow for 3,500 extra containers to be moved each night. That’s just a fraction of the approximately 120,000 containers that move every week.
In the meantime, there are still 62 container ships that are waiting to load approximately 500,000 containers in Los Angeles/Long Beach. 25 more are due to arrive in three days.
Seroka explained that these vessels will be carrying components and parts for U.S. producers as well seasonal goods for retailers trying to get stock for the start of the “make-or-break” holiday selling season on Nov. 26, Seroka added.
Extended hours at Los Angeles/Long Beach could benefit Honda Motor Co, hit hard by the automotive chip shortage, and Mattel (NASDAQ:), which is under pressure to get holiday toys to stores, according to Panjiva, the supply chain research unit of S&P Global (NYSE:) Market Intelligence.
The effort also raises the issue of where to store all this stuff.
According to the Los Angeles Times, Greater Los Angeles had a record-low vacancy rate for warehouses and industrial spaces in the third quarter. CBRE Group (NYSE:), a commercial real estate services firm.
Douglas Kent, executive vice president of the Association for Supply Chain Management, stated that even if we have increased the port’s capacity, we will still need to locate space for temporary storage in warehouses.