By Paul Benfer, Kinetic Supply-Chain Services –
The announcement of a $100 daily fine at the Ports of Los Angeles and Long Beach will do nothing to aid the situation on the ground. And it’s not exclusively an issue in Southern California. Just about all of the East Coast ports are backed up at least two weeks or more.
According to Alan Murphy of Sea Intelligence, North America is experiencing a ten percent increase in container volume in 2021. Los Angeles and Long Beach are experiencing volume increases of more than twenty percent. Los Angeles and Long Beach will handle twenty million TEU’s this year. Normally, sixteen or seventeen million move through those ports. How do you handle an increase of three or four million containers? Not well is the answer.
My team works with port draymen every day. Every single drayage carrier is bleeding drivers, as they can make more money and not experience delays and congestion at the port by taking their trucks elsewhere. Where a driver could make three or four turns a day, they now only make one or two. The other issue is the return of empty containers. The ocean lines use the drayage carriers to control the flow of empty returns. They require appointments to schedule returns. Right now it can take seven to ten days to return an empty container in LA and LB. So Far only Yusen has announced that they will adjust their policy for returning empty containers. The delay in returning empty containers is compounding the chassis shortage. An empty container waiting for an appointment sits on a chassis.
It was interesting to note that less than forty-eight hours after the president announced that LA and LB are moving to round the clock operations, the terminal operators said it wasn’t feasible to move to 24/7.
Bottom line is that there is limited infrastructure, warehouse space, drivers and equipment. And I don’t believe the ocean carriers really care, as they are printing money right now. I say that based on what happened to agriculture exports this year. It became so difficult to export crops that Congressman Garamendi pushed for changes to the Shipping Act of 1984.
Don’t look for relief anytime soon. Once consumer spending eases, which appears to be happening, there is still plenty of inventory that must be restocked. Inventory levels are at an all time low, so I don’t think we will see a decrease in demand until mid-way 2022 or later.