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From a boat in the San Pedro Bay, Flexport Founder + CEO Ryan Petersen could see the Ports of Los Angeles and Long Beach terminals were at a near standstill. The two adjoining ports account for about 40% of all shipping containers coming into the US.
This was back in October, before the number of ships queued in the Pacific, waiting to unload containers, exceeded 80.
Last week, the number hit 83, another historical figure in a mostly continuous climb since the end of June. In 2021, the average wait time for a ship to be unloaded at LA ports is 10 days, and the longest wait this year was a staggering 44 days (it used to be 2 days). Once they are unloaded, many of the containers are sitting at the port for a week or more before they can be picked up for the next leg of their journey.
The fact that American consumers have increased the rate at which they spend on goods over services during the pandemic has only exacerbated the problem. For instance, there has been a 74% increase in imports of toys, games and sporting goods since the start of the pandemic lockdowns in the US.
The congestion crisis at Los Angeles and Long Beach ports is unlikely to subside anytime soon without timely efforts by port authorities, local and federal governments, and possibly the military.
During his three-hour boat ride in October, Ryan counted around seven cranes operating—a bad sign. If there is a bottleneck, it should always be the most capital intensive part of the line. In a port that's the ship-to-shore cranes. The cranes should never be unable to run because they're waiting for another part of the operation to catch up. Instead, hundreds sat unused, because the bottleneck is in the container yards filled with containers, and a lack of empty chassis for truckers to come pick them up.
Overwhelming the Bottleneck
The next day, Ryan shared his observations and suggestions in a series of Twitter posts that went viral and were shared widely. In his posts, he mentioned that when you're designing an operation, you must choose your bottleneck. If the bottleneck appears somewhere that you didn't choose, you aren't running an operation. It's running you and you must overwhelm the bottleneck to get things moving again.
The tweet is part of a 14-post thread that outlines an unequivocal plan to clear the bottleneck in the container yards and unclog Southern California’s logistics backlog.
Here are some of Ryan’s suggestions for reducing port congestion:
1) Increase the number of available chassis. First, free the local truck chassis being used as container storage by allowing higher vertical stacking of empty containers in Long Beach truck yards. The local zoning laws only allowed for two containers to be stacked on top of each other in the inland zone.
(NOTE: Within a day of Ryan’s posts on social media, and multiple industry experts weighing in on the discussion, the city of Long Beach issued an emergency order allowing for a temporary increase in how many ocean containers can be stacked in lots—from two to up to six.)
This way, thousands of chassis can be freed up to go back to hauling containers out of the ports.
It may also help to borrow as many available chassis as possible from the military and National Guard to further speed container movement.
2) Create a temporary container yard on a large piece of government land near the port. Ryan recommends the lot be at least 500 acres or more, near an inland rail head, within 100 miles of the Long Beach/Los Angeles ports complex.
Direct rail and trucks to the temporary container yard. Instead of long journeys to places like Dallas or Chicago, trains can make faster turns back and forth from the ports to this temporary yard to clear the Los Angeles/Long Beach bottleneck. Trucks can then skip the port to pick up containers directly from this yard, helping reduce port congestion.
3) Carriers can help redirect some containers to smaller ports. Barges or smaller container ships could haul containers from Southern California’s ports to places with less congestion, like Portland or San Diego, for faster transfer inland.
The ultimate goal is to free up space at the port so cranes and workers can start unloading ships, ease congestion, and get the ports working again.
Ryan’s tweetstorm has since gone viral: NPR, The Washington Post, The Los Angeles Times, Business Insider, and Yahoo Finance covered the story and his recommended fixes. Representatives from local and federal governments have reached out to Ryan and others in the private sector to work on a solution together.
But the real questions remain:
- Will these ideas work?
- How quickly can they help alleviate the congestion crisis?
- What is holiday shopping going to look like this year?
- What are the long-term impacts of this broken supply chain on the world economy?
No Quick and Easy Solution
These solutions are based on sound supply chain management principles and address the bottleneck itself.
“Consumers are just buying more stuff than ever,” Ryan tells Yahoo Finance. “ . . . And our infrastructure, frankly, isn't ready for it . . . And it's getting held back by dilapidated port infrastructure, by congestion, traffic of non-automated ports, and sort of bad rail connections to the port. We're just recognizing the pain of 20 years of not investing in our infrastructure. And we're feeling all that pain in one year right now.”
To his point, a variety of factors has made it increasingly difficult for truckers to pick up or drop off containers at ports and warehouses, leading to today’s congested ports, lots, and railyards.
By focusing on what actually clears the ports, containers can begin to move at a pace that aligns more closely with the speed of the cranes. Until that happens, there’s nowhere for the containers to go, and the number of ships waiting to unload will continue to grow.
Read more about the cause and effect of trucking challenges:
The solutions proposed can work, but they require coordination, collaboration and lift. For instance, the same day as Ryan’s tweetstorm, Long Beach Mayor Robert Garcia responded by doubling the vertical limit on stacked containers from two to four for 90 days.
But it only took a few days to fill up that extra space.
The Biden administration now allows port authorities to use federal grant money for creative solutions, which could support temporary container yards. Funding for five pop-ups has already been approved for the Port of Savannah.
Right idea, just 2,400 miles away from Los Angeles.
And, as we continue to chip away at the challenges, the ideas need to keep coming.
For more firsthand insights from Flexport Founder and CEO, Ryan Petersen, follow him on Twitter.