A tech CEO got big attention for his plan to ease the backlog at Los Angeles ports
You wouldn't expect a Twitter thread all about shipping logistics and ports to go viral, but that's what happened recently to Ryan Petersen, the founder of the freight-forwarding tech company Flexport.
He wrote about what he found when he rented a boat to check out the giant backlog at the California ports of Los Angeles and Long Beach.
Yesterday I rented a boat and took the leader of one of Flexport's partners in Long Beach on a 3 hour of the port complex. Here's a thread about what I learned.— Ryan Petersen (@typesfast) October 22, 2021
There are currently massive supply chain problems around the world that began with the coronavirus pandemic. It's a complex problem leading to delays and shortages of products across the U.S. And a big part of it involves these two Southern California ports.
The two adjoining ports account for about 40% of all shipping containers coming into the U.S. Before the pandemic, ships would typically not have to wait in line before getting to the port. But as of Tuesday, there were 77 ships waiting to unload cargo, according to the Marine Exchange of Southern California.
The backlog at the port first began in October 2020. Things got better earlier this year, but the line has been mostly growing since June.
Part of the problem involves the shipping containers themselves. The port is overflowing with them.
"There are so many containers stacked up in the port that they can't unload a ship," Petersen told Morning Edition. "And if they can't unload the ship, well, then they can't haul away containers because the containers need to go onto the ship in the slot where they unloaded the last one. And it's the same on the land side where there are so many containers stacked up in the port that it's really limiting their ability to receive returned [empty] containers. ... And so on both sides, land and sea, you have this vicious cycle happening where you can't clear the traffic jam because of the traffic jam."
Using vertical space
One possible solution: Let storage areas outside of the port stack up these containers higher. For instance, Petersen says, local zoning rules prevented the owner of truck yards in Long Beach from storing containers more than two high. Because of this, he had to keep empty containers stored on truck chassis. And because the truck chassis were holding empty containers, they couldn't be used to receive full containers from the ships.
Petersen's tweets reached the mayor of Long Beach, who temporarily allowed containers to be stacked up to four-high in certain areas.
Petersen's thread also proposed calling in spare truck chassis from the National Guard and military, creating a new container yard within 100 miles of the port, forcing railroads to haul containers to this site and bringing in small ships to haul containers to other ports.
California Gov. Gavin Newsom reached out to Petersen to discuss his ideas, according to the Los Angeles Times.
The federal government, meanwhile, is pursuing other angles. Last month, the Biden administration pushed the Port of Los Angeles to expand its operating hours. The LA and Long Beach ports, which are under the authority of local governments, announced a plan to fine ocean carriers for shipping containers bound for trucks or trains that are left in the port beyond a certain number of days.
The tangle won't be unraveled quickly
As with any complex problem, any pitch for a relatively simple solution will be met with some criticism. Trucking industry experts told the Times that being able to stack containers higher will make little difference.
So what would it take to fix the backlog? The overall problem boils down to the fact that when the pandemic began, Americans stopped spending as much on experiences — going out to restaurants or traveling — and instead bought more stuff, particularly stuff sold online.
Suddenly there were more shipping containers coming into the U.S. from abroad.
"And our infrastructure, we haven't invested in it in the last few decades. Our ports are not big enough, not deep enough, not automated enough," Petersen says. "Our supply chain became a real grind and a real blocker on economic growth and vitality."
Economists at Goldman Sachs predicted last week that backlogs at U.S. ports would last into at least the middle of 2022.
Petersen thinks that if prices go up, customers will buy alternative products that don't require going through the ports. He's hopeful that the government will invest more in expanding port capacity as well.
"It's going to be some temporary pain," he says. "But in the long run, these things work themselves out."
This story originally appeared on the Morning Edition live blog.
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