The ports of L.A. and Long Beach: ‘Move your freight or else’

All eyes are on the ports of Los Angeles and Long Beach, where the ships waiting in San Pedro Bay have become a symbol of the worldwide logistics crunch.

According to Marine Vessel Traffic.com, there were about 40 ships at anchor in the bay and more than 30 stopped and waiting on the high seas as of Sunday. The ports are overwhelmed by the volume of arriving containers. There’s no place to put them. As much as 40% of all imports to the U.S. come through the ports of Los Angeles and Long Beach.

Chassis to put under those containers are in short supply too. Other ports around the U.S. regularly send empties by rail and sometimes by truck to Los Angeles for a quicker trip back to Asia, but the ports have had to restrict empty returns. With only a specific number of empties accepted each day, trucks arriving after the allotment has been met are turned away. Many empties are parked outside the port. Some sit on chassis needed to put full containers on the road.

But the main focus is on those container ships, each with someplace else they’re supposed to be. Every ship waiting outside Los Angeles means logistical pain somewhere else in the world.

Two weeks after President Biden urged 24-hour operations to move cargo, little seems to have changed.

The ports now start operations earlier, stay open later, and operate on weekends. FreightWaves reported that the city of Long Beach is waving some zoning restrictions to allow higher stacks of containers – mostly empty – on lots and warehouses. Union Pacific Railroad is urging shippers to route their Los Angeles/Long Beach containers to a foreign trade zone in Salt Lake City for inland distribution. Much of the work from there would be by truck. But none of that has made a significant dent in the backlog of containers at dockside waiting for pickup.

Port operators are feeling heavy pressure from D.C. as well as from all the U.S. businesses that rely on imports, many of them heavy hitters like Amazon, Walmart and Target. So the port operators have chosen a kind of nuclear option to move containers out of the port and make room.

On Friday, the port commissions of Los Angeles and Long Beach voted unanimously to impose fines of $100 a day for containers with $100 added each day a container stays too long. The fines will be in place for 90 days.

Containers to be hauled by truck have eight days at the port before the fines kick in. Containers to move by rail have six days. The fines can mount quickly. American Shipper pointed out that fines would reach $46,500 a day for a container staying 30 days beyond its limit. Of course, much of the logistics industry is howling in outrage.

You guessed it. They’re the same folks pressuring the ports and the government to do something about the congestion, but drastic fines weren’t what they had in mind. Shippers understand that while the bills will be sent to the ocean carriers those guys will pass them on.

The ports hope the fines will result in a 40% reduction in the boxes now at dockside. Whether that will actually happen remains to be seen. There’s big-time push and pull going on behind the scenes around those fines. In any case, while the crisis at Los Angeles/Long Beach is bad, its severity is much amplified in the press – including the logistics media.

Despite all the noise, freight is moving through the ports. The president of ILWU Local 13, the longshoremen’s union, told KABC-TV in Los Angeles his people are moving nearly 2 million containers a month compared to 1.2 million before COVID hit. And more generally, while there are shortages and more freight around the country than can be moved on any given day, freight is moving. Lots of it.

So, what about all those ships waiting to moor like floating Ubers waiting for the next ride? The government can’t do more than huff and puff. What’s needed is a shock treatment for all the businesses involved. One-hundred-dollar fines compounded daily are a good start.

Some ocean carrier rates have as much as quadrupled year-over-year some sources say. In many instances, they have easily doubled. That’s surely enough to pay ship operators for the disruption in their schedules and then some. They have money. So do astronomically profitable companies like Amazon and Walmart, whose merchandise is in those containers and on those ships.

Let me fantasize for a moment. Together, some of the world’s richest companies with facilities around the globe have the resources to clear ships and containers from one spot on the world map. They have the money to hire the trucks and find or create warehouse space outside the ports. That space may not be in metropolitan areas. They’d have to hire more trucks to haul containers farther, and they’d have to pay more to do it. Hallelujah.

Lots of people in transportation like to point out all the reasons it can’t be done. But it can. It would just take cash, a bunch of creativity, and some righteous corporate will. Maybe those fines should start at $l,000 a day.

Meanwhile, back here in reality, big-box retailers and many others do have the resources to move out at least their own containers. If the fines are made to stick, you can be sure they’ll find a way. It’s smaller companies without massive resources who will end up with big demurrage bills from ocean carriers and freight forwarders. Some things never change. LL

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