The scramble continued this week to address the supply chain crisis, with the Port of Los Angeles prepping new properties to store overflowing shipping containers and the Port of Long Beach pressing on toward 24/7 operations, a change to which truckers and warehouses have begun warming — albeit slowly.
Both ports also moved quickly to defend a hefty surcharge on ocean carriers for boxes that take up needed terminal dock space after a certain number of days. That fee will go into effect Monday, Nov. 1.
“We’re in a crisis, we’re in a national crisis and we’re in a global crisis,” Port of Long Beach Executive Director Mario Cordero said in a virtual news briefing on Wednesday afternoon, Oct. 27. “We’re exploring all options.”
The Los Angeles City Council, meanwhile, expedited approvals on Wednesday that are necessary for the ocean carrier fee to go into effect at the Port of LA.
Typically, the harbor commission would vote on such a policy and then the City Council would have to concur. But since the commission isn’t scheduled to meet until Friday and the fee is set to go into effect on Monday, Councilman Joe Buscaino introduced a motion Wednesday that essentially flipped the order.
The council OK’d the fee, paving the way for the commission to give the final approval on Friday during a special meeting.
During the council discussion, Buscaino, whose 15th District includes the port, told his colleagues that the supply disruption is “only going to get worse” if something isn’t done soon.
“The pandemic has created chaos in the global shipping supply chain,” Buscaino said, “and we are now at emergency crisis levels.”
There is “no excuse,” he said, for containers to be taking up space at terminals while dozens of ships wait for their turn.
The new policy, which applies to both ports, will charge ocean carriers a fee for truck-bound containers that sit in terminals nine days or more and those set to go out by rail that remain at least three days. The fee will be $100 per container. But the fee will also increase by $100 per container per day beyond those minimum thresholds.
Some have expressed concerns, however, that the surcharge could get passed on to cargo owners, though port officials said that was not their intent.
“This is not intended as a pass-on cost,” Cordero said. “It’s intended so we can start moving the needle.”
Currently, both ports are crammed with containers because of an ongoing surge in cargo that has also overwhelmed every corner of the supply chain, including the trucking and warehouse industries.
The supply chain has bottlenecked, leading to a crisis in which some goods have taken months to make it to store shelves and major companies, including Target, have chartered private freighters so they can be more flexible in which ports they use. The crisis has also led business officials and the Biden administration to worry that there could be a shortage of goods during the holiday shopping season and that the backlog could threaten the country’s economic recovery from the coronavirus pandemic.
For most of the past year, dozens of arriving ships bearing cargo from Asia, much of it ordered via e-commerce throughout the pandemic, have had to drop anchor and park offshore, waiting for space at one of the twin ports that, together, take in 40% of the nation’s imported goods.
“Today, we have 74 ships on the coast waiting to get into either the Port of Long Beach or the Port of Los Angeles,” Cordero said. “A record was set this past Sunday with 80 at anchor. In normal times, it’s zero. We have a logjam.”
But until unloaded cargo from one ship is moved out, another ship can’t be processed, which was the impetus behind the new fee.
Ships have been waiting 10 to 12 days just to get inside the two ports to unload.
“That’s unacceptable,” said Port of Long Beach Deputy Executive Director Noel Hacegaba. “We need to move those boxes out.”
But the cure isn’t simple.
“There isn’t a single switch,” Hacegaba said. “There are a series of switches.”
There is an ongoing need, for example, for more truck drivers and warehouse workers, Cordero said.
And a chassis shortage has turned some of that equipment into “makeshift warehouses,” Hacegaba said.
“We’ve never handled this magnitude of cargo,” Hacegaba said. “We need the entire supply chain to step up.
“Getting the broader supply chain to transition is a multi-step process,” he added. “We took the first step here with TTI, but we need warehouse and truck power and every level of the supply chain” to join the effort.
Hacegaba was referring to a pilot program to expand hours at Long Beach’s TTI terminal. But adoption, Cordero said, has been slow.
“We are working with other partners in the supply chain to entice them to use” the late night and early morning options, Cordero said. “We’ve seen some usage, however, there is still plenty of opportunity for more deliveries during that (3-7 a.m. ‘hoot’) shift.”
But truckers, he added, “are slowly warming to the new hours.”
And other terminals, he said, are also beginning to open for earlier morning hours and additional Friday night and weekend hours.
With a combined 20 million twenty-foot equivalent units — the universal metric for cargo — anticipated to flow through both ports this year, the urgency is clear, Cordero said.
The Long Beach port is currently storing 12,000 containers on a 64-acre storage site and the city recently said it would temporarily increase stacking limits, which are regulated in the zoning code.
That won’t happen at the Port of Los Angeles, a spokesman there said, as in-port stacks are limited to five full containers or six unloaded containers, and external storage yards limit container stacks to two.
But the Port of Los Angeles has now identified 12 “pocket” sites adjacent to or part of existing terminals on port property where temporary container storage can be handled, all in an effort to ease the overflow, which has seen empty containers end up in surrounding neighborhoods, particularly Wilmington.
The nation currently has a trade imbalance, with far more goods getting imported to the U.S. than exported elsewhere. That means ports nationwide mostly see full containers come in and then send empty containers out — so they can be reloaded at foreign ports and shipped back to America.
But shipping lines have asked other ports throughout the nation to send their empty containers to the West Coast to allow for a more efficient return to Asia, which has stuck the Ports of LA and Long Beach with even more empty containers than they would normally have.
Empties have surged in the past year, causing an explosion of the cans throughout the ports, as well as in some community storage yards.
The Harbor Trucking Association this week commended the ports for tackling the issues, adding in a news release that it also hoped there will be “an emboldened effort to remove empty containers that are taking up chassis capacity.”
Matt Schrap, CEO of the association, said resolving that issue would help speed up cargo movement.
“For our members, the real issue is with the thousands of empty containers sitting atop thousands of chassis strewn throughout our facilities in the American Southwest that we are unable to return back to the harbor,” Schrap said in a written comment. “Ideally, additional space on dock should allow terminals to receive empties to free up chassis for more import movement off dock.”
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