Top executives of U.S. ports voice concerns about supply chain crisis

by Julia Pierrepont III

LOS ANGELES, Oct. 28 (Xinhua) — As the cargo congestion at the Ports of Los Angeles and Long Beach in southern California, the busiest port complex in the United States, has hit record-setting levels, local port executives have spoken of multiple causes, while voicing concerns about a regional and global supply chain crisis.

“This is a national and global supply chain crisis, not just at the Port of Long Beach,” said Port of Long Beach Executive Director Mario Cordero during a virtual press conference on Wednesday.

With 70 container ships still floating in the bay awaiting a berth to offload, less than last week’s record-setting 100 ships, Cordero said there were multiple causes for the pile-up.

The most recent cause of congestion was “a sharp rise in consumer demand of 21 percent in retail sales from last year,” due to spikes in consumer online buying, as well as an additional surge as retailers are trying to stock up for the holidays, he said.

But causes of congestion go far beyond seasonal buying habits, Cordero said, citing less production due to COVID-19, the global energy shortage, shortages of equipment and truck chassis, as well as a shortage of truck drivers and warehouse workers.

The 31-square km twin ports in southern California’s San Pedro Bay typically account for around 40 percent of container cargo entering the United States, with China as the port complex’s biggest trading partner.

Some temporary shutdowns of Chinese ports amid the pandemic also have a big impact on global trade, since China is still the epicenter of manufacturing, he said, adding that the Asian country continues to be significant to the twin ports.

The supply chain was already in trouble, starting with the failure of the previous administration’s trade war policies, Cordero said, but the additional, more recent stressors on the system have dramatically highlighted the urgent need for system-wide changes.

He admitted that the twin ports must take bold measures to address the situation.

“The situation is complicated and challenging,” said Cordero. “But the logical conclusion is that we need a transformation of the entire supply chain.”

Cargo bottlenecks have sent shipping costs by sea sky high. Shipments between China’s eastern city of Shanghai and Los Angeles used to cost 1,600 U.S. dollars to 2,100 dollars per container before the pandemic, but can now be as much as 20,000 dollars.

Cordero said that the Consumer Price Index has increased 5.4 percent, and last year’s high cost of shipping is being passed down to the consumer. He called for quick moves to mitigate that.

One improvement that Port of Long Beach has been pushing for is 24-hour operations, seven days a week. At a recent meeting at the White House, U.S. President Joe Biden threw his weight behind moving more U.S. ports to around-the-clock operations.

Deputy Executive Director and Chief Operating Officer at Port of Long Beach Noel Hacegaba voiced his support for going 24/7 at Wednesday’s press conference, noting “Asian ports have been 24/7 for years. Railways have been 24/7. Now the Port of Long Beach is leading the transformation to take first steps in multistep transformation.”

Some of the port’s terminals have already moved to a 24/7 work schedule. But getting all the stakeholders on board is still an uphill effort.

Hacegaba told reporters that warehouses and truck power also need be open at night.

“We need an Amazon state of mind,” Cordero noted, referring to cargo velocity. “We can agree that Amazon changed everything in the industry and when customers expect their goods.”

The twin ports announced on Monday that as part of efforts to move cargo out of container storage areas more quickly, beginning next week, a fine of 100 dollars a day per container will be levied against shipping companies that unload cargo too slowly at the two ports.

Officials said that the Port of Long Beach is expanding its on docks rail investment to put more emphasis on moving cargo off the port by rail to avoid the longer delays of shipping by truck.

Cordero is optimistic that the port will continue to be a leader in innovation and supply chain transformation.

Urging stakeholders to keep up the collaborative spirit, he said: “Let’s not debate what we can’t do. Let’s come together to think what we can do.” Enditem