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‘Do your Christmas shopping early’: Cargo delays likely to persist amid busy holiday season

Containers wait to be offloaded by ship-to-shore gantry cranes at the Long Beach Container Terminal at Middle Harbor, Friday, Aug. 20, 2021. Photo by Brandon Richardson.

Congestion at the San Pedro Bay port complex has left a record number of ships idling in the San Pedro Bay in recent weeks—with no definite end in sight. That means that as cargo shipments ramp up ahead of the holiday shopping season, this year’s holiday gifts might get stuck at sea with them.

Over the past year, increased online shopping has led to an unprecedented number of containers passing through the twin ports of Long Beach and Los Angeles, with Long Beach hitting new records every month. This has caused congestion at the port and delays along the supply chain, leading experts to predict a shortage of popular gifting items—from electronics to clothing—just ahead of the holiday season.

The twin ports, though, are working to reduce delays in cargo processing by working to expand gate hours during nighttime and weekends, including in a new pilot project extending gate hours at Pier T that was announced on Tuesday. But it’s unclear how much of an impact those measures will have.

“There’s definitely going to be shortages,” said Patrick Penfield, professor of supply chain management at Syracuse University. Many retailers, Penfield projects, will struggle to fill their shelves in time for the holidays.

Port of Long Beach Executive Director Mario Cordero agrees.

“You need to do your Christmas shopping early,” Cordero said. While the twin ports have been working to reduce bottlenecks in the processing of goods coming into the country via the Pacific, it’s unlikely they will be eliminated within the next few months, he noted.

Challenges exist all along the supply chain, from a lack of warehouse space to missed appointments by trucking companies, limitations on rail capacity and equipment shortages.

The unprecedented cargo volumes arriving at the ports during the pandemic have stretched resources, creating a backlog of ships to be processed and extending the time a container spends at a marine terminal after it is unloaded from an ocean carrier.

On Monday, 70 ships were sitting at anchor or in drift areas in the San Pedro Bay, awaiting processing. Depending on the size of the vessel, the port of Long Beach’s six terminals can have between 15-16 ships at berth at the same time, according to port authorities. Each ship takes an average of three-to-five days to unload, leading port officials to project that the backlog will last well into next year.

For terminal operators, a lack of space because of the influx of containers is the main challenge at the moment, said Jessica Alvarenga, manager of government affairs at the Pacific Merchants Shipping Association.

“We need the containers out of our terminals,” Alvarenga said.

Once unloaded, cargo needs to be moved onto trucks or freight trains to be transported to warehouses and distribution centers, a process that is taking an increasingly long time, according to the most recent data published by the association.

In August, 28.4% of containers set to be moved onto trucks sat at the port for more than five days before pickup. Of containers waiting to be loaded onto freight trains, 42.7% waited more than five days for their departure. For comparison, prior to the pandemic, containers rarely spent more than three days before they left the port by truck or train.

As trucking companies and rail operators struggle to keep up with demand for the transportation of containers from the port to warehouses and distribution centers, containers pile up at the port, where they compete for space with empties waiting to return.

Those empty containers, which are piling up as the U.S. imports more goods than it exports, are further adding to congestion, said Harbor Trucking Association CEO Matt Schrap. There were simply “too many empties still sitting on dock,” he added. Last month, 70% of all outbound containers were empty, although it’s unclear how long those empty containers spent at the port before they were loaded onto ships for export.

As for full containers, trucking companies and railroad operators run up against limitations in warehouse capacity. Warehouses in the Los Angeles region, which includes the South Bay and the Inland Empire, are nearly full, a July study commissioned by the Pacific Maritime Association noted.

Industrial warehouse vacancy rates have dropped to less than 4% in the Inland Empire and less than 2% in the Los Angeles South Bay area near the ports, according to the study’s findings.

The surge in online shopping during the pandemic has highlighted many challenges that actors along the supply chain—from terminal operators to trucking companies—have bemoaned for years.

Some have suggested increased automation as a preventative measure for future surges, arguing that automated terminals would be less susceptible to fluctuations in the availability of labor, be it for nighttime operations or in a public health crisis like the current, which has seen port workers falling ill and unable to work.

Automation is a controversial topic and one port executives and local operators have been careful to take a stance on. “It’s a prickly topic,” said Alvaranga, of the Pacific Merchants Shipping Association.

Terminal operators, who are in competition with each other, don’t individually share data on the amount of cargo they process. This makes it difficult to compare the efficiency of those with higher levels of automation to those processing cargo manually, Alvaranga said.

Port Executive Director Cordero was careful to take a stance, citing the same reason.

For Cordero, the current situation has instead offered an opportunity to once again push for solutions he has been advocating for in previous years: the “24/7 supply chain.” This includes expanded hours of operation at the port terminals.

“We need a new model of operation,” the port director said, acknowledging that this supply chain-wide change likely won’t happen overnight. But, he added, “the cost of doing nothing is not acceptable.”

Last week, the port announced increased efforts in working with marine terminal operators to extend gate hours through the night. On Tuesday, they said a pilot project at Pier T—the main terminal for shipping giant Mediterranean Shipping Company—will test-run open gates 24 hours a day, seven days a week. It’s unclear at this point how the pilot program will affect cargo backlogs.

Both marine terminal operators and the trucking association have been skeptical of expanding gate hours as a solution to the backlog, arguing that it doesn’t address capacity challenges along the supply chain. Instead, they have advocated for improvements to the system for container storage and pickup order, and pickup appointment systems, respectively.

Expanding gate hours is no overnight fix, Cordero acknowledged, but he argues it’s a step in the right direction.

“We need to start where the container arrives,”  he said. “We just have to get out of our comfort zone.”

Because of the complexity of the supply chain and the unprecedented pressure the pandemic has placed on its participants, port officials and experts think it’s unlikely that backlogs and delays will be completely eliminated before their impacts can be seen on the shelves of retail stores come holiday season.

“The backlog’s too big,” said Penfield, of Syracuse University. Shoppers will still get their products, he said. “It just may be after the holidays.”

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