The traffic jam of 70 ships signals failure of just-in-time delivery
Standing at the lookout on South Gaffey Street overlooking the San Pedro Bay, one can see the armada of ships anchored in what has been increasingly called a “log jam” in the global supply chain just outside the federal breakwater to the ports of LA and Long Beach. It has caused alarm and anxiety from the offices of large capitalist importers to union halls of dockworkers and truckers.
The supply chain is clogged by the pandemic surge of imports and the infrastructure of both labor and transportation is not adequate to handle the volume. Automation on the terminals has not solved this problem but the international shipping corporations are reaping huge profits as container prices have surged.
The ILWU pensioners president, Greg Mitre, noted that APM-Maersk’s profits during the first quarter of 2021 are greater than all of what was reported in 2020 at $39 billion. Maersk is not alone, as container-shipping prices have soared over the past 14 months.
Maersk is just one of many shipping corporations doing business here, but it’s the world’s largest integrated shipping company with a total capacity of 4.1 million twenty-foot equivalent units, or TEUs. It operates a fleet of 708 vessels including 307 of its own container vessels and 401 chartered container vessels as of December 2019. Currently, four of the 70 ships parked outside the breakwater are APM cargo vessels.
According to Capt. James Kip Louttit, executive director of the LA Marine Exchange, the organization that acts like air traffic control for shipping, “this number of ships at anchor and adrift is the most we’ve historically ever had.”
He explains that it’s not really a log jam, but a very full parking lot, there’s only enough room for some 61 ships to actually anchor outside the break wall, as the continental shelf drops off steeply to a depth of one mile. The remainder are “adrift” and kept separated by the exchange, which means that the ships have to keep their engines running to maintain position — those at anchor also need to run their auxiliary engines to keep their lights on. This has created environmental concerns because of the emissions generated.
Clearly on top of all of the other challenges Los Angeles is facing, this may be its biggest stress test to see how resilient or sustainable the “just in time delivery” system and the global goods movement industry actually is. And the ports of the San Pedro Bay have the attention of the industry and the media worldwide.
Rising to the Challenge
The goods movement industry has knighted the Los Angeles Port executive director Gene Seroka as its most valuable player. The Containerization & Intermodal Institute honored him with the Connie Award for his 33-year career in goods movement and his stewardship of North America’s busiest port — a port that has experienced historic, record-breaking performances since his appointment. The award also identified Seroka’s helming the city of Los Angeles’ effort to quickly get personal protective equipment, or PPE, from any place within the county. This past July, he was given his first pay raise in four years (the third such raise since he was appointed in 2014), for the same reasons listed above.
Be that as it may, this past week and for many weeks before, the anchorages around the twin harbors have looked like a parking lot for oil tankers and huge container ships. This past week there were some 61 ships at anchor. This while the two ports are reporting record levels of containers transported with the dedicated essential work of longshore workers, teamsters and other casual laborers. The hidden costs to our communities is often glossed over with the spectacular reports on cargo movements. Not the least of which is the increase in air pollution from all the ships burning diesel fuel while waiting for a berth.
The July 2021 report boasts “The Port of Los Angeles processed 890,800 Twenty-Foot Equivalent Units (TEUs) in July, a 4 percent increase compared to last year. Last summer is when U.S. consumer purchasing began to build momentum and was the start of 12 consecutive months of year-over-year growth at the Port of Los Angeles.” That’s the good news, as it’s been keeping port workers busy and even adding both union and non-union jobs. The downside is what doesn’t make the news — loaded exports decreased 27.6% to 91,440 TEUs compared to the same period last year. It was the lowest amount of exports at the Port of Los Angeles since 2005.
Empty containers climbed to 329,999 TEUs, a jump of 20.4% compared to last year due to the continued demand in Asia.
In short we are exporting more Los Angeles air back to Asia than we are American goods. And even with all of the automation and the three-week outlook from The Signal powered by WabtecCorp’s Port Optimizer, the backlog of cargo anchored at our ports is getting national media attention from the Wall Street Journal, Bloomberg News and Time Magazine among other trade news sources. And only now are both ports working on a 24 hour plan to keep the traffic and cargo moving while the shipping keeps arriving with few options to off-load immediately.
All the while Seroka gets a hefty pay raise and honors from the Grunion Gala at Cabrillo Aquarium. Seroka is on a roll, except when it actually comes to hitting the target for zero-emissions. The port has been the most profitable it’s ever been in 110 years so where’s the payback for the communities surrounding the ports?
Last April’s environmental report published by the ports of LA and Long Beach went on at length about the sustainability of the aquaculture-flora and fauna of the San Pedro Bay, yet nary a word about the toxic air pollution and nothing about the number of toxic soil locations on port properties still waiting to be cleaned up. And because of POLA’s largess to charities and community groups, no one except a few courageous environmental justice activists ever challenges them on their stewardship of the state tidelands. Seroka years ago committed a minimum of $10 million a year or 10% of the retained operating income annually, but we have yet to see the full plan. However, the clean up of contamination and air pollution should not be added to the Public Access Investment Plan but needs to be part of the both ports’ operations budgets.
For the last 20 or more years the buzzword in commerce has been “just-in-time-delivery”, which was sparked by the rise of Amazon, Ebay, Etsy et al and executed by FedEx, UPS and a diminishing US Postal Service. It was one of the wonders of the 21st century and the Internet that we could shop at home from our computers, pay with a credit card or some other form of debit system and get the products in a few days or even “next day” if not today if you wanted to pay for that.
Of course during the pandemic, online ordering spiked by billions of dollars as main-street businesses struggled or closed. One of the end results was a surge in imports and an ongoing traffic-jam at the ports of the San Pedro Bay. This, however, is not unique to just this port as it’s happening in every harbor in North America and how it’s handled here in the nation’s largest industrial port complex could be the example of how to overcome the crisis or perhaps how not to. This may be Seroka’s ultimate challenge.
Is it the mindset, the infrastructure or both?
The year and half of the pandemic has revealed many things to Americans about structural inequalities and lack of coordinated planning — first with the lack of planning on the COVID-19 pandemic itself, then with the lack of PPE, the distribution of PPE and then the near implosion of the patchwork of healthcare and hospital intensive care units. There was no national strategy or preparation for a pandemic. It revealed how interdependent we all are on an economic system we take for granted and people we too often didn’t consider as “essential” until the toilet paper runs out at Vons. The same is quite true with the logistics of the supply chain.
The traffic jam at the port is not just about getting TEUs off the ships but the entire support structure of having enough chassis to carry the cans, truckers or trains to move them and the warehouse space and workers at the distribution centers scattered all over southern California to handle the cargo. This of course demands an investment in a larger trained workforce. And then let’s not forget the traffic and pollution that comes from not having nearly enough zero emission vehicles.
Of course it’s not just the cargo delivery system, but our healthcare system (if one can call the patchwork of public-private health insurance and hospitals a system) but even our very delivery of government services, justice and police reform, that has been under attack from the pandemic, housing and homeless crisis, as well as politically by domestic insurrectionists bent on raising the Confederate flag on Jan. 6 at the nation’s Capitol.
There’s a kind of mindset that is stuck on what is perceived to be economically feasible now or politically capable of being done as opposed to what the future demands and what this crisis dictates. In the end the congestion at the ports must not be seen in isolation from these other issues mentioned above but as a systemic problem of the way Southern California as well as the nation has not prepared for a future that is both uncertain and demanding of a different vision and bold new solutions.
The question for the leaders of our cities and ports is whether they will take this opportunity to change this future. Or in the words of Abraham Lincoln, “The best way to predict the future is to create it.”
