California ports are having trouble managing shipping delays. Despite extensive backlogs, the busiest US port complex has yet to adjust its operating hours in order to pick up the slack. In contrast, major ports in Europe and Asia already work around the clock even before the pandemic.
Backlogs Across Entire Distribution Line, Not Just California Ports
As a result of the business-as-usual schedule, many US companies are finding themselves low on stock. Nike already accepted that it won’t have enough sneakers to sell for the holidays. Costco recently announced a limit on toilet paper purchases. Even artificial Christmas tree prices rose by 25%.
The delays and backlogs are not exclusive to California ports. Each stop in the US distribution network system is currently experiencing delays. Shipping lines, port workers, truckers, warehouses, railways, and retailers.
They all struggle with worker shortages. They also blame one another for delays. In addition, they have yet to agree if implementing a 24/7 schedule will help reduce the backlogs.
Editor's Inflation Warning: "Investors are woefully unprepared for what may be a once-in-a-generation shift in the market"
California Ports Remain On Regular Schedules Despite Pandemic
American terminals such as California ports have yet to adapt to increasing imports brought about by companies restocking products made abroad. As a result, tens of thousands of containers remain stuck at Los Angeles and Long Beach terminals.
These two California ports serve as a gateway to more than 25% of the country’s imports. In fact, around 60 ships are waiting in the water. It can take up to three weeks before getting permission to dock.
However, California ports can’t adjust their operating hours to meet the demand. According to Uffe Ostergaard, Hapag-Lloyd AG North America president, it won’t be enough. “With the current work schedule, you have two big ports operating at 60%-70% of their capacity.
That’s a huge operational disadvantage,” he said. Los Angeles and Long Beach operate independently. While Long Beach is considering working multiple shifts to operate 24 hours a day, LA will wait for better conditions before doing so.
According to Gene Seroka, executive director of the Port of Los Angeles, they’ll wait for warehouses and truckers to operate 24/7 before they do so. “It has been nearly impossible to get everyone on the same page towards 24/7 operations,” he said.
They’re Playing The Blame Game
Many shipping managers blame truckers for the delay in shipment. Many drivers fail to show up at their scheduled pick-up time. This causes cargo to accumulate at yards. It also prevents workers from getting the next shipment ready.
Meanwhile, truckers blame terminal congestion. They insist that delays at one appointment can cause them to miss the next. In addition, truckers say that shipping lines aren’t doing enough to clear out the towers of empty containers taking up space at the docks.
Longshoremen Want Empty Containers Gone Before They Agree to a Third Shift
Currently, longshore policy consists of two shifts: 8 am to 4 pm and 6 pm to 3 am. The five-hour window is available but is rarely used, owing to it being 50% more expensive. Cargo pickups on Saturday are also rare, being charged as premium shifts. In addition, no work shifts are available on Sundays.
The International Longshore and Warehouse Union, which represents the California ports dockworkers, agreed to have members work the third shift or on weekends.
However, port authorities must ensure that empty containers leave the port. This gives workers more space to unload items. “Congestion won’t be fixed until everyone steps up and does their part,” said Frank Ponce De Leon, an ILWU committeeman.
“The terminal operators have been underutilizing their option to hire us for the third shift,” he added. However, night shifts remain a nonstarter. The ports will need to make adjustments, like opening an all-night warehouse.
Watch the 23 ABC News video reporting that supply delays reported due to congestion at Los Angeles, Long Beach ports:
How will port delays get a solution? Will US ports adapt to Europe and Asian ports and implement a 24/7 shift to accommodate backlogs?
Let us know what you think about the prospect of stock shortages this holiday season. Leave your comments below.
Attention ALL Capitalist Subscribers: Elon Musk, Mark Cuban, and Richard Branson reveal how $25 gets you into one technology set to grow 2,000X BIGGER than Bitcoin.