Over the last number of decades, trade has become internationalized. 40% of international trade to and from our country comes through Long Beach and Los Angeles ports. Finished goods from the far east are on those containers, as are vital parts for manufacturing in the USA, like chips for electronics, cars, and household appliances, car parts, and a list of other necessary items for our home economy to thrive. Also, our exports are dependent on these ports operating at flank speed. These two ports are vital for our economy to work seamlessly in this age of “just in time” deliveries. What has gone wrong?
First, we can blame the pandemic, and the pent-up demand that it has caused as economies all over the world have now opened up. This puts additional stress on ports, especially with the ports at Long Beach and Los Angeles. These two vital ports are especially stressed for a multitude of reasons. Let’s look at them:
- The Longshoreman’s union controls these ports. The average Longshoreman makes over $174,000 per annum, and these coveted jobs are protected with the threat of closing down these ports if their wants and needs are not met.
- Automation has been fought by the union, eliminating any real effort to increase productivity at these ports.
- The union dictates how many shifts are allowed, and will not let the ports work at full capacity with 3 shifts per day, 7 days per week.
- The port authorities have had no real economic incentive to create any excess capacity because of a lack of evident ROI (return on investment).
- California environmental regulations preclude rail companies to tie up with the port, even though rail companies have offered to take on the investment in infrastructure unilaterally.
- California environmental regulations will not allow semi-trucks with engines over 3 years old pick up at the ports.
- Other California regulations that support the Teamsters union eliminate independent operators from picking up or dropping off at the ports. Only employee union drivers working for approved companies are allowed into the port for pick-ups and drop-offs. Intermodal-Chassis trailers are also in short supply on the West Coast. With these trailers in short supply, trucks that comply with California regulations in short supply, and approved drivers in short supply, and un-cooperative Longshoremen that will not work a 3-shift schedule, there is a serious bottleneck here.
This problem with these ports is a major cause of the inflation we are seeing right now. There are just too many dollars chasing too few goods! What is the Biden Administration doing about it? Nothing other than trying to pass another multi-trillion-dollar bill that would make matters even worse. The transportation Secretary, Pete Buttigieg actually took 2 months off on paternity leave in the middle of this crisis. Once back, all he can tell us is that the crisis will probably last as long as the “pandemic”, and that the “Build Back Better” multi-trillion dollar social spending bill will somehow come to the rescue? The Biden Administration remains tone-deaf on the problem, as inflation roars out of control! Leadership is needed here, and there is none in sight!
What should be done? First, temporarily nationalize the ports until the crisis has been alleviated. Lift California regulations and let independent truckers and trucks with older engines into the ports. Re-direct the supply of Intermodal-Chassis trailers from less busy ports to where they are currently most needed. Break the bottleneck, open the economy, and fight inflationary issues with supply chain problems with real-time solutions.
Longer-term, these ports have to be automated and brought up to 21st century standards. To do this union hold on these ports have to be eliminated. Otherwise, this problem will just resurface again and again. Will any of this actually happen? With the state of California in play, and with the clueless Biden Administration, I wouldn’t hold your breath!
One thought on “SHORT AND LONG-TERM SOLUTIONS FOR OUR SUPPLY CHAIN PROBLEMS”
Well written and, unfortunately, pretty spot on. The Longshoremen have ruled that roost for decades and the United States will not stare them down. Most of Europe went to automation long before you and I left the Long Beach area.