Although the issue has been brewing for months, the supply chain problems in America, and in particular the roles that ports in Los Angeles or Long Beach, play in this problem, are now a major topic on the news. Finally, Joe Biden somewhat addressed the issue; however, like many things Biden, the “solution” isn’t really a solution, and there is no acknowledgment of the federal and state regulations and laws that have, for the most part, caused the problem.
The port of Los Angeles will be open 24/7 by President Biden to address supply chain bottlenecks. This is nearly double the time that it has been open.
He says, “Today’s announcement could be a game-changer.” pic.twitter.com/KYAoimE5Hf
— CBS News (@CBSNews) October 13, 2021
After a wait of over an hour, Biden declared Wednesday that the Port of Los Angeles would join the Port of Long Beach for 24/7 operation. This was in an effort to remove cargo containers from shipyards and to allow ships anchoring offshore to load their cargo. It should work, right? Only people who don’t understand how a supply chain works.
Biden’s announcement isn’t exactly news for those who have been paying attention, and people should know that the ports won’t simply be throwing open their gates immediately. Port officials on September 17 announced that the pilot program would see both ports expand their hours with the aim of FinallyOperate 24/7
Officials said that the Port of Long Beach has begun a pilot program to allow drayage trucks to return and retrieve containers at night. Meanwhile, the Port of Los Angeles coordinates a weekend gate program called Accelerate Cargo LA. This program will be available on a limited basis.
Industry experts told Freightwaves that simply expanding port hours wouldn’t get goods to market faster because unless distribution centers/warehouses are also open 24/7, truckers won’t want to pick up loads during off-hours. One executive characterized the move as a “nothing burger” to Loadstar:
While the news of extended hours is welcome, it has not been received by everyone. One forwarder executive described this as a “nothing burger”.
Craig Grossgart (senior vice-president ocean at Seko Logistics) stated that this initiative would only allow terminals to tidy up and be marginally more efficient.
“Truckers and customers don’t want to pull boxes at night, because few DCs operate 24-hours a day. So, the trucker will have to pre-pull the container, store it in a secure yard, which costs more money obviously and comes with liability for the security of the container,” he remarked.
Noel Hacegaba, Long Beach’s Deputy Director agrees with the statement that there are other parts of the supply chain which need to improve.
“Given the magnitude of the cargo volumes we’re seeing, every segment of the supply chain needs to maximize their hours of operation….The objective of this pilot is to open the gates all night and serve as a catalyst for warehouses and trucking companies to move containers all night.”
There was an enormous logjam at Los Angeles area ports as of September 16:
The wait time to place containers at terminals takes six days. On-dock railroads can take nearly 12 days. Containers on the streets need an average time of 8.8 days to locate dock space in warehouses. The situation is so bad that 65 container vessels were stacked up along the coast Thursday waiting to berth and unload.
California’s ports are facing a number of state-specific issues in addition to the labor shortage nationwide. This is the entire Twitter thread is a must-read, and Sal Mercogliano’s YouTube series on the issue is a must-watch.
One major challenge facing those operating in California’s ports is the state’s CARB pollution regulations.
You can stream it on Youtube @mercoglianosRuns is also an “essential” read for the comments of truckers, railmen, and warehousemen who are all involved in the ongoing global supply chain collapse.
This is an example of how CARB pollution rules limit SoCal port clearance.
— Trent Telenko (@TrentTelenko) October 12, 2021
Trucking is being impacted by the fact that only 3 year old tractor trucks are allowed to collect and deliver containers at SoCal ports. This creates a huge inflationary pressure as trucking costs rise because the SoCal freight rates attract trucks from other parts of the country.
— Trent Telenko (@TrentTelenko) October 12, 2021
And, depending on how SCOTUS rules on a pending case regarding how California’s AB5 applies to the trucking industry, the problem will only get worse. If owner-operators who contract with larger freight companies must be classified as employees (it doesn’t matter if they have an LLC or corporation; they won’t meet the ABC test since both companies provide essentially the same services), expect a huge contraction in trucking capacity in California.
AB5 was enacted in 2019. It defines the status and rights of independent contractors in the state. The law establishes the ABC test to determine whether an individual is an employee or an independent contractor. And for trucking, the B prong is viewed as making it difficult to hire independent owner-operators as drivers, because it defines a person engaged in the primary activity of the hiring company — like a trucking company hiring a truck driver — as an employee. A trucking company would hire janitorial workers to clean their offices. This is because janitorial work does not fall under its purview.
There were two AB5/trucking-related cases on SCOTUS’ docket for this term; on October 5 the Court denied certiorari in the Cal Cartage case, but hasn’t yet ruled on another case brought by the California Trucking Association (CTA). The case involved a Federal Judge who issued an Injunction on January 2020 that blocked the application of trucking laws until the court could hear legal challenges. In April the 9th Circuit Court of Appeals ruled against CTA, but enforcement of that order has been stayed pending SCOTUS’ decision, which means the January 2020 injunction is still in effect.
The thumbnail takeaway here: If you think there’s a shortage of truckers now, you’d better pray that SCOTUS rules in CTA’s favor.
Sadly, some Republicans don’t understand the issue either. Michelle Steel (freshman representative from Huntington Beach) introduced legislation to prevent ships anchoring in Southern California off the coast for 180 days. That’s it. That’s the bill.
For the next 180 days, the SHIP Act will ban cargo vessels from anchoring or idling in Southern California’s coastal waters. Now is the time to bring back our ports and get these ships out of our waterways. pic.twitter.com/nJ9UI8iAs4
— Rep. Michelle Steel (@RepSteel) October 12, 2021
The bill was clearly intended to anger environmentalists over the oil spillage that occurred off Orange County. The current evidence suggests that multiple ships’ anchors damaged the pipeline over a number of months. Obviously, if those ships weren’t idling offshore for weeks, the anchors wouldn’t be near the pipeline. However, one would think that a woman who served as an Orange County Supervisor for years and has been involved in California politics for decades would understand that this is a much more complex issue; her solution would be just as harmful as Biden’s inept plans.