Date: Monday, April 26th, 2021
Source: Daily Breeze
Cargo backups at the Ports of Los Angeles and Long Beach are accelerating talk of the importance of a 24/7 supply chain operation, a complex transition that would require buy-in from numerous sectors across the nation.
And none of that would be easy.
One leading industry official compared the task to “solving world hunger.”
Most recently, containers have seen an uptick in how long they wait for rail pickup — known as “dwell time” — amid a current cargo surge, further underscoring the need for a solution.
“Given everything we’ve experienced in the last 12 months,” said Noel Hacegaba, deputy executive director of Administration and Operations for the Port of Long Beach, “it’s time we take a serious look at what it will take to transition to a 24/7 supply chain.”
Port of Long Beach Executive Director Mario Cordero has been talking about a 24/7 transition for some time now, and he’s not the only one.
The issue has been pushed to the forefront as the twin ports have seen an unprecedented onslaught of cargo arriving on their shores since last summer. The coronavirus pandemic and subsequent shutdowns initially caused a drastic drop in cargo numbers beginning last March. But then imports rebounded in the summer, with an online buying spree — from people who could no longer travel or spend money on entertainment — fueling an historic surge that has left ships anchored for days outside the ports, and all the way to south Orange County, waiting to get in to unload.
“In 2020, we went from ‘doom and gloom’ to ‘fast and furious,’ all on the turn of a dime,” Hacegaba said. “We had steep declines in early 2020 followed by a tsunami of cargo.”
Both ports have been scrambling to keep up and, eventually, get ahead of the flow, which is expected to continue into the summer — or, perhaps, longer. Terminal dwell time for cargo waiting for pickup on port property overall is improving, but rail pickup times are still going up.
About a third of the cargo arriving in local ports is picked up by rail to be delivered to farther reaches of the U.S. The combination of rapid ship calls and a shortage of rail cars in the west, in part due to inclement weather throughout the nation, spiked rail dwell time up to more than 10 days on average in March, according to statistics released by the Pacific Merchant Shipping Association , which represents West Coast terminal operators and shipping lines.
That’s two days higher than the averages reported in February.
While overall dwell times are dropping in the Port of Los Angeles, Executive Director Gene Seroka said this month that the breakout rail dwell time of nearly 11 days in March stands out as a piece of the puzzle that needs to be addressed.
“That’s extremely high for us,” Seroka said.
Rail dwell time was about 8 days in January and 8.6 days in February, Seroka said.
Seroka attributed the longer rail wait times to the current cycle of rapid, back-to-back ship calls and severe weather across the rest of the nation that has delayed train timetables coming back to Los Angeles.
The railroads, meanwhile, are focusing on boosting railcar availability, with some improvements being seen already, said Lena Kent, executive director of Public Affairs for the BNSF Railway, the largest intermodal carrier serving the ports.
In an April 15 YouTube video, Tom Williams, BNSF vice president of Consumer Products Business Group, laid out a number of company initiatives being undertaken.
“Our recent service has not met your expectations,” he said in the message, “and the expectations we put on ourselves.”
In response, BNSF is pouring hundreds of millions of dollars into its hubs, including the one serving Los Angeles, to handle more trains and shipments, he said.
“We are starting to see positive momentum,” Kent said, “as we continue to recover from various disruptions to our network.”
More robust cargo tracking and data sharing systems, now being implemented at both the Ports of Los Angeles and Long Beach, is helping as well, Hacegaba said.
But a longer-lasting fix always seems to come back to the ambitious 24/7 supply chain operations goal, which already is practiced by U.S. railroads and is in place system-wide in Asia.
“We need all parts of the supply chain to be willing to operate 24 hours a day, seven days a week,” Kent said, “to help keep up with these unprecedented demand levels.”
So how hard would that be?
“You’d have to have everybody come to the table” and pledge to coordinate all operations on a consistent basis, said Jim McKenna, president and CEO of the Pacific Maritime Association, the San Francisco nonprofit that represents West Coast shipping industry employers. “It would be like solving world hunger.”
Just opening terminal gates for 24 hours, he said, wouldn’t solve the wider issue. Rather, every part of the supply chain must be synchronized for 24/7 operations, including truckers, warehouses, retailers and rail lines.
It’s a challenging task, Hacegaba agreed, but not necessarily impossible.
“Every segment needs to be 24/7,” Hacegaba said. “Our port already is operating close to 24/7 but we also need the warehouses and distribution centers to expand their operations. Those containers need a place to go and if they were open 24/7, it would increase the fluidity.”
It would require warehouses and distribution centers, many of them located in Riverside and other inland regions, to expand their operations.
Seroka, in his monthly remarks to the media, said warehouses need more flexibility to reduce street dwell time, which is when container trucks and rails wait to drop off cargo at a facility that has limited space.
“We have to take a system-wide approach,” he said this month. “The Suez Canal blockage is a good example; it reminded us that congestion anywhere in the global supply chain will lead to ripples across the entire supply chain.”
Labor agreements, trucking industry regulations and safety protocols would also have to be addressed.
“We’re working on it,” Hacegaba said of the preliminary discussions that are now beginning to take place. “Given the experience of the last 12 months, it’s time to start asking the question and taking a serious look” at the issue.
While the cargo crunch being seen now is expected to subside in time, the experience of the coronavirus pandemic has shown how fragile the supply chain is.
“We’re in such a sensitive time right now,” McKenna said. “If any part of the supply chain has a problem, everyone has a problem.”