While the new bipartisan infrastructure bill that passed Congress in early November will lead to major improvements to the nation’s roads, bridges, waterways, and more, the U.S. supply chain has continued to operate under duress. Improvements to our national infrastructure will certainly result in long-awaited improvements to the nation’s ports, but our current problem is much more pressing. Indeed, the two topics are closely intertwined.
The problem lies at the ports. Imports at the nation’s congested container ports are expected to remain high at least through 2022. Retailers are making big moves to ensure their shelves are stocked for the 2021 holiday shopping season, but nothing is guaranteed. And with the supply chain still tightened up, it is hard for manufacturers and businesses to properly forecast.
There are so many containers backed up and warehouses are so full that local resident around Southern California ports are complaining that containers are winding up parked on their streets, blocking parking and being an overall eyesore.
Logistical Challenges Remain
While dockworkers unload as fast as they can, other logistical problems remain. One such challenge is the ability to move containers out of the ports so that another ship can come in. Technological and labor-related issues cause a bottleneck at this point.
Port authorities need a better empty return process combined with more trucks, truck drivers, rail capacity, and warehouse workers. Yet, an inability to find workers hampers expansion efforts for companies of all sizes. And with more than 70 ships at anchor waiting at the Port of Los Angeles and Long Beach, the urgency of the matter is pressing. Fortunately, efforts on the federal and state level may begin to soon have an effect.
Federal Efforts to Address the Problem
The big transportation-related news of October 2021 was President Biden’s announced deal for the Port of Los Angeles to operate 24 hours a day, seven days a week. The Port of Long Beach wasn’t far behind in making the same move.
Meanwhile, the White House has stated in a November progress report that there are discussions currently on potentially waiving port fees for truckers on nights and weekends. Their hope is that this move would incentivize off-peak use. Currently, truck drivers must pay a fee to enter the port no matter day of the week or time of day through a system called Pier Pass.
The benefits of getting more containers picked up during off-peak hours are numerous. Rigs can get around the port easier, hitch up, and move containers out during low-use times of day. Of course, terminal operators must ensure they provide staffing to accommodate the additional service hours.
The federal government has been encouraging retailers to get in on the effort. One such example was that of the tool company Black & Decker, which recently announced it would move 33% of its Southern California cargo to off-peak hours. Gap Inc. has said something similar, initially committing to moving 15% of their cargo during these times. While these are small movements, it takes only a seed to grow a tree. Moves like this set the pathway for other companies to follow.
Announcements have also been made regarding the U.S. Army Corps of Engineers. Within the next couple of months, the Corps is going to begin $4 billion worth of construction work at coastal ports and inland waterways. Don’t be surprised to begin seeing these infrastructure jobs appearing on a street near you soon.
Other Funding Sources Revealed
Not all the money used to alleviate port problems comes from the infrastructure bill. Though they handle 40% of the nation’s port volume, California isn’t the only place where port problems have reared their ugly head. East Coast ports, which are far older, have also been experiencing record-setting container volume.
Take the Port of Savannah as one example. In what may be a surprise to many, the Port of Savannah is the fourth-largest container port in the U.S. That’s why the White House has made moves to open more capacity at the Port of Savannah. The Georgia Port Authority, with support from the U.S. Department of Transportation, will be provided with $8 million to establish five pop-up container yards in Georgia and North Carolina. These five yards, accessible by rail and truck, can accommodate more than 500,000 containers over the course of a year.
Money will also be shifted to the DOT to open additional grant programs with other ports around the country. They hope making the grant application process more flexible will provide additional funding opportunities and spur a larger uptake of the grant applications. The federal government wants to re-allocate unused grant money so that ports have the funding and flexibility to address problems directly related to supply chain problems.
With the passage of the infrastructure bill and moves by the Biden administration, some expected $17 billion is expected to be spent upgrading ports and waterways in the coming five years. And with the coastal ports not being the only place where containers are backlogged, investment in the entire system is long overdue.
The Governor’s Office Tries to Address Port Problems
Southern California trucking groups say the situation at the ports is caused by long-term problems, not only by the current crush of imports to meet soaring consumer demand. And now, California’s governor has made moves to try and address the issue. Whether these efforts will succeed, or fail, is still an open question, but don’t expect the debate to end any time soon.
Governor Newsom has since issued an executive order trying to address port backlog problems. The text of the order states that state agencies shall work to identify state-owned properties and other locations that could be used as short-term storage spaces for containers once goods are unloaded from ships. It also orders the California state DOT to identify priority freight routes. Finally, they are looking at a temporary exemption to current gross vehicle limits so that trucks can haul additional containers.
Finally, California’s executive branch aims to create educational and training programs for port workers and others within the supply chain. Their hope is to create a pipeline of workers and consultants who can address port and supply chain problems with innovative solutions.
The order directs California’s Labor and Workforce Development Agency to use “existing resources to identify potential high road training partnerships to increase education, career technical education, job training, and workforce development opportunities for port workers and other workers across the supply chain.”
California Advocacy Organizations Support the Governor’s Efforts
The Governor’s executive order also directs the California Department of Finance to work with state agencies to develop longer-term solutions that support port operations and the smooth movement of freight. California is also expected to spend a lot more money next year on port and transportation infrastructure improvements and electrification. Money will even be put into workforce development programs.
Normally at odds with the Governor’s mansion, the California Trucking Association has commended the Newson administration for focusing on freeing up state land to store empty containers. Equipment providers are also receiving incentives from local governments to get empty containers off chassis. How long it will take for these changes to show impact remains to be seen.
In a released statement, the CTA said:
“There is much more work to be done to address the effects of this global crisis, including mitigating the enormous costs congestion has placed on truckers and California importers and exporters, adding regulatory flexibility to account for manufacturing and parts shortages, and the disastrous impact enforcing AB5 would have if CTA’s petition to the U.S. Supreme Court is denied right before Christmas.”
AB5 is a law that basically makes it impossible to operate in California using the traditional owner-operator model.
Meanwhile, efforts at the federal level continue. In August, the Biden administration named DOT Deputy Secretary John Porcari as “port czar.” Porcari will work with Transportation Secretary Pete Buttigieg and Vice President Kamala Harris on a supply chain disruption task force. Some reports even state that the White House has considered using the National Guard to help unload cargo and drive trucks, though it is not likely this idea will ever come to fruition.
The crush of goods coming into the port is due to pent-up demand following the pandemic, and no matter what measures are put into place, most believe the supply-chain challenges will last well into 2022.