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's not a single lever we can pull today to open all gates, executive director Gene Seroka said on Thursday.
On Wednesday, the White House held stakeholders – including retailers Walmart and Home Depot, logistics firms United Parcel Service and FedEx and Samsung, and electronics supplier Walmart. The companies pledged to use more overnight workers to ease the backups at the Los Angeles and Long Beach port complex that is the No. 1 Seroka is trying to squeeze every minute, every hour of efficiency out of this port that we can, said. Most work is currently carried out during the day, although some parts of the operation run 24-7 now. The White House said adding additional overnight shifts could double the amount of time as cargo is moved and Union leaders are onboard.
COVID 19 fueled demand for consumer goods while simultaneously shutting factories and ports. A shortfall of workers ranging from truckers to warehouse staff are driving up the cost of goods, contributing to product shortages, and raising alarms about a worsening global supply chain crisis.
The global supply chain was creaking along before the pandemic, said John Porcari, port envoy for the White House Supply Chain Disruptions Task Force.
The health crisis laid bare weaknesses in a brittle global supply chain built for predictable, just-in-time cargo flows, he said. In many cases, it is your grandfather's infrastructure that we're working with. The ports of Los Angeles and Long Beach significantly lag Chinese rivals in terms of port efficiency, according to a list prepared by IHS Markit and IHS World Bank.
Port terminals in China usually 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 supply chain improvements will not come at the flip of a switch. Changes are needed at every link to ease the impact of unintended consequences, they said.
The White House efforts announced Wednesday are expected to account for just 3,500 additional containers moving at night - a tiny fraction of the 120,000 containers already moving each week.
Meanwhile there are 62 container ships waiting to unload some 500,000 containers at Los Angeles Long Beach - and another 25 are scheduled for the next three days.
Those vessels carry parts and components for U.S. manufacturers as well as seasonal goods for retailers to offer racing stock for the Nov. 26 kickoff of the make-or-break holiday selling season, Seroka said.
Extended hours at Los Angeles Long Beach could benefit Mattel, the automotive chip shortage hit hard, and Honda Motor Co, under pressure to bring holiday toys to stores. According to Panjiva, the supply chain research unit of S&P Global Market Intelligence, this can hurt Honda Motor Corp.
And the effort raises the question of where all the stuff is.
Its Greater Los Angeles region logged a record low vacancy rate of 1% in warehouse and other industrial space during the third quarter, according to CBRE Group, a commercial real estate services firm.
If we increase the 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.