Supply Chain Solutions to the Supply Chain Crisis

The daily news has highlighted the bottleneck at U.S. ocean ports, especially the Port of Los Angeles/Long Beach, where 40% of products arrive from Asia.

At an industry function in November of 2021, Ron Brown, the Port of Oakland Maritime and Commodities Representative, shared his perspective regarding the backlogs at the ports and said the links of the supply chain that are broken have caused adverse effects and the pandemic exposed the supply chain problem. Mr. Brown stated there is an imbalance all over the world, not just in some ports like LA/Long Beach. Big equipment, containers and chassis, which transport a container, are out of position, and this has overloaded the system. The imbalance is not just in the United States. For example, in Shanghai, there are 150 vessels waiting to move to another port. Every trade lane has been affected, he said. Charleston and Savannah are backed up and Boston is skipped completely. However, there is some good news. The wait time at the Port of Los Angeles is down very slightly from 15.3 days in August versus 14.2 days in October. There are other U.S. ports that share longer wait times. For example, wait times in October at the Ports of New York/New Jersey were 8.4 days and the Port of Savannah were at 9.7 days.

The Agriculture Transportation Coalition were asked by U.S. government agencies, the White House and Congressional Committees for a solution to the supply chain crisis. U.S. Industry leaders and public officials have combined forces to look at solutions to the supply chain crisis. Exporters, importers, port leaders, truckers, terminal operators and public officials, such as Governor Newsom, have proposed solutions and drafted the “Inventory of Supply Chain Solutions.” This publication lists 64 proposed solutions which will require a discussion of feasibility, cost, benefits, interest of various stakeholders and short and long-term impacts on the supply chains.

One example of a proposed solution is to change the marine terminal operations/trucking into a terminals process. Such as, reducing congestion when the truck, hauling an import container out of the terminal after dropping the container and chassis at the importer location, would either hook up a full or empty container and return to the terminal or proceed to an exporter’s facility to hook up a loaded export container and return to the terminal. Both options would result in two round-trips converted into one. Another recommendation is to address the trucking costs by increasing the national uniform truck weight because the current restrictions in California means that a transport that requires two trucks will require three trucks in California, which increases congestion. One example of reducing the driver shortage is to reduce the age for eligibility for training and testing for the Commercial Driver License. Another supply chain solution is to target the chassis shortage by ending the “box rules”, which encourages any available chassis to be eligible to carry any container rather than today’s practice when carriers can require containers to be carried only on a chassis owned by a particular company, which is more restrictive.

More recommendations included in the publication is to create a single data portal that tracks trucking wait times, terminal appointments, cargo movement and shipping availability. This supply chain data portal tracking investment would mandate participation by all port stakeholders, and it would start with one port, like LA/Long Beach, and roll out the single real- time data portal to other ports. There is a recommendation to change the current ocean carrier practice, such as to mandate carriers to provide shipper customers, terminals and truckers with accurate arrival time, loading windows, container return data (ERD) and continually update the information like the airlines do. Another solution is to establish a shipper advocate at the Federal Maritime Commission (FMC) to resolve disputes between carriers or terminals and the US exporters or importers. Also, proposed is to prohibit ocean carriers from marking up marine terminal demurrage charges because today the carriers add another $100-$200 per day on top of the marine terminals’ demurrage, which ranges from $20-$40 per day.

The collaboration of stakeholders to create and discuss solutions is a first step in resolving the bottlenecks at the port. It is necessary to develop and implement supply chain solutions because the status quo is not sustainable, per the Agricultural Transportation Coalition.

Although there is no optimism for the end of the bottleneck to end for this holiday season, the White House has put a high-level task force on the problems, and the meetings among all the players are continuing. The CEO of Flexport, a freight forwarder who services include ocean, air, rail freight, trucking and customs brokerage, stated that there is still the risk that we can’t get product in time for the 2021 holiday season and consumers will pay more. The supply chain is certainly more visible in light of the bottleneck and delays, but despite the focus on supply chain, industry experts state that unfortunately there are no assurances that backlogs and increased shipping costs won’t continue through the second or third quarter of 2022.