Though the problem has been building for many months, supply chain issues in the United States and particularly the role ports in Los Angeles and Long Beach play, have become a hot topic in the news cycle. Finally, Joe Biden somewhat addressed the issue; however, like many things Biden, the “solution” isn’t really a solution, and there is no acknowledgment of the federal and state regulations and laws that have, for the most part, caused the problem.
President Biden announces that the port of Los Angeles will begin operating 24/7 to help supply chain bottleneck issues, nearly doubling the amount of time it is now open.
"Today's announcement has the potential to be a game changer," he says pic.twitter.com/KYAoimE5Hf
— CBS News (@CBSNews) October 13, 2021
On Wednesday afternoon (after keeping folks waiting for an hour) Biden announced that the Port of Los Angeles will join the Port of Long Beach in operating 24/7 in an attempt to clear the shipyards of cargo containers and allow the dozens of ships anchored offshore to offload their cargo. That should do the trick, right? Only for people who don’t understand how a supply chain works.
Biden’s announcement isn’t exactly news for those who have been paying attention, and people should know that the ports won’t simply be throwing open their gates immediately. On September 17 port officials announced the start of a pilot program in which both ports would have expanded hours, with the goal of eventually operating 24/7:
The Port of Long Beach is drawing up a pilot program for drayage trucks to retrieve and return containers at night, while the Port of Los Angeles is coordinating a weekend gate program, dubbed Accelerate Cargo LA, that will operate on a trial basis, officials said.
Industry experts told Freightwaves that simply expanding port hours wouldn’t get goods to market faster because unless distribution centers/warehouses are also open 24/7, truckers won’t want to pick up loads during off-hours. One executive characterized the move as a “nothing burger” to The Loadstar:
The announcement of the extended hours has been welcomed, but not everybody is impressed. One forwarder executive described this as a “nothing burger”.
Craig Grossgart, senior vice-president global ocean of Seko Logistics, remarked that the initiative will do nothing beyond allowing terminals to clean up their yards and make them marginally more efficient.
“Truckers and customers don’t want to pull boxes at night, because few DCs operate 24-hours a day. So, the trucker will have to pre-pull the container, store it in a secure yard, which costs more money obviously and comes with liability for the security of the container,” he remarked.
Long Beach Deputy Director Noel Hacegaba agrees that other segments of the supply chain need to step up:
“Given the magnitude of the cargo volumes we’re seeing, every segment of the supply chain needs to maximize their hours of operation….The objective of this pilot is to open the gates all night and serve as a catalyst for warehouses and trucking companies to move containers all night.”
As of September 16, there was a huge logjam at Los Angeles-area ports:
Dwell time for containers at terminals is six days, the wait time for on-dock rail is nearly 12 days and it takes 8.5 days on average for containers on the street to find dock space at warehouses. The situation is so bad that 65 container vessels were stacked up along the coast Thursday waiting to berth and unload.
In addition to the nationwide labor shortage, ports in California face a few state-specific challenges. This entire Twitter thread is a must-read, and Sal Mercogliano’s YouTube series on the issue is a must-watch.
One major challenge facing those operating in California’s ports is the state’s CARB pollution regulations.
The Youtube stream @mercoglianos runs is also a "must read" for its comments from truckers, railwaymen, warehousemen and others involved in the on-going world wide supply chain collapse.
Case in point this comment on how CARB pollution rules throttle SoCal port clearance.
— Trent Telenko (@TrentTelenko) October 12, 2021
The fact that tractor trucks no older that 3 years old are required to pick up or deliver containers at the SoCal ports is creating an immense inflationary pressure on trucking as the SoCal freight rates draw such trucks from the rest of the nation.
— Trent Telenko (@TrentTelenko) October 12, 2021
And, depending on how SCOTUS rules on a pending case regarding how California’s AB5 applies to the trucking industry, the problem will only get worse. If owner-operators who contract with larger freight companies must be classified as employees (it doesn’t matter if they have an LLC or corporation; they won’t meet the ABC test since both companies provide essentially the same services), expect a huge contraction in trucking capacity in California.
AB5, enacted in 2019, seeks to define the status of an independent contractor in the state. It sets as law the ABC test for determining whether a worker is an employee or a true independent contractor. And for trucking, the B prong is viewed as making it difficult to hire independent owner-operators as drivers, because it defines a person engaged in the primary activity of the hiring company — like a trucking company hiring a truck driver — as an employee. (A trucking company hiring a janitorial service to clean the offices would not face this issue, since janitorial work is not its business.)
There were two AB5/trucking-related cases on SCOTUS’ docket for this term; on October 5 the Court denied certiorari in the Cal Cartage case, but hasn’t yet ruled on another case brought by the California Trucking Association (CTA). In that case, a federal judge issued an injunction in January 2020 blocking the implementation of the law in the trucking industry until legal challenges could wind their way through the courts. In April the 9th Circuit Court of Appeals ruled against CTA, but enforcement of that order has been stayed pending SCOTUS’ decision, which means the January 2020 injunction is still in effect.
The thumbnail takeaway here: If you think there’s a shortage of truckers now, you’d better pray that SCOTUS rules in CTA’s favor.
Sadly, some Republicans don’t understand the issue either. Freshman Rep. Michelle Steel, who represents the Huntington Beach area, introduced a bill to keep ships from anchoring off the coast of Southern California for 180 days. That’s it. That’s the bill.
The SHIP Act would ban cargo ships from idling or anchoring in the coastal waters of Southern California for the next 180 days. It's time to get the ports working again and get these ships moving and out of our waters. pic.twitter.com/nJ9UI8iAs4
— Rep. Michelle Steel (@RepSteel) October 12, 2021
Her bill is clearly aimed at environmentalists who are outraged about a recent oil spill off the coast of Orange County. The current evidence suggests that multiple ships’ anchors damaged the pipeline over a number of months. Obviously, if those ships weren’t idling offshore for weeks, the anchors wouldn’t be near the pipeline. However, one would think that a woman who served as an Orange County Supervisor for years and has been involved in California politics for decades would understand that this is a much more complex issue; her solution would be just as harmful as Biden’s inept plans.