LOS ANGELES, Oct 14 Reuters - The Port of Los Angeles is beginning the hard work of convincing terminal operators, importers, warehouse owners and trucking firms to embrace moving more cargo at night.
It is not a single lever we can pull to open everything, Executive Director Gene Seroka said on Thursday.
On Wednesday the White House gathered stakeholders including retailers Walmart and Home Depot, shipping firms United Parcel Service and FedEx, and electronics supplier Samsung. The companies pledged to employ more overnight workers to ease the backups at the Los Angeles and Long Beach port complex that is the No. 12 facility for overnight logging operations. Seroka is trying to squeeze every minute, every hour of efficiency out of this port as much as we can. Most of the work is already done during the day, though some parts of the operation are 24 7 and also run at night. The White House said adding more overnight shifts could double the available time to move cargo and union leaders are on board.
COVID - 19 fueled consumer goods demand while at the same time closing factories and ports. A shortfall of workers from truckers to warehouse staff are driving up the cost of goods, contributing to product shortages and raising alarms about a global supply chain crisis.
The White House supply chain was creaking there before the pandemic, said John Porcari, port envoy for the Global Supply Chain Disruptions Task Force.
The health crisis required global supply chain of brittle, just-in-time cargo flows to prepare weaknesses, he said. In many cases, it is your grandfather's infrastructure that we are working with. The ports of Los Angeles and Long Beach significantly lag Chinese rivals when it comes to port efficiency, according to a ranking prepared by the World Bank and IHS Markit.
Port terminals in China typically operate 24 7, many tasks are rare and labor slowdowns are automated, U.S.-based shipping industry consultant Jon Monroe said.
Seroka and Porcari stressed that U.S. Supply Chain Improvements will not happen at the flip of a switch. Changes are needed at every link to ease the impact of unintended consequences, said they.
The White House efforts announced Wednesday are expected to account for just 3,500 additional containers moving each week at night - a tiny fraction of the 120,000 containers that already move each week.
There are 62 container ships waiting at Los Angeles Long Beach to load some 500,000 containers - and another 25 are scheduled to arrive within the next three days.
Those vessels are carrying parts and components for U.S. manufacturers as well as seasonal goods for retailers racing stock up for the Nov. 26 kickoff of the make-or-break holiday sales season, Seroka said.
Extended hours in Los Angeles would benefit Mattel, which is hit hard by the automotive chip shortage, and Honda Motor Co, which is under pressure to get holiday toys into stores, according to Panjiva, the supply chain research unit of S&P Global Market Intelligence.
Where should I put all the stuff?
The Greater Los Angeles region logged a record low vacancy rate of 1% for warehouses and other industrial space during the third quarter, according to CBRE Group, a commercial real estate services firm.
If we increase capacity at the port, then we still have to find space to temporarily store goods in warehouses, said Douglas Kent, an executive vice president of the Association for Supply Chain Management.