The supply chain in the United States seems to be once again on the forefront of all news media outlets. As farmers we rely heavily on trade, moving products out of the country for export, but also moving supplies into the country as imports. And I’m also a mom who (like possibly a few of you out there) relies (arguably, possibly, too much) on the supply chain to also front porch delivery many items for our family. I’m not a trade expert, I know enough to spread out the risk on our farm and try to make the best business decisions that I can. So I reached out to those who are in the thick of this whole transportation situation and have been for a very long time. Below is a recent article from BOSSCO Trading & Boshart Trucking.
It’s likely that you’ve seen something come across the news or on your Facebook feed now about the extreme congestion of container ships sitting outside of Los Angeles/Long Beach waters, waiting to berth, you’ve probably felt the impacts of supply chain disruption at home and/or your business.
BOSSCO Trading and Boshart Trucking have been in the drayage/export shipping business for over 15 years, and these challenges are some of the greatest we’ve faced to date. And we aren’t alone; an experienced employee at Tyson Foods, who has been in logistics for 45 years said this is the worst he’s seen. There’s a lot of finger-pointing, but this isn’t an easy situation you can’t blame one party or fix with one solution. There is no silver bullet. The supply chain is not flexible and we are seeing that in full force, not to mention butterfly effects creating bottlenecks everywhere. Many are at fault, and many will need to work together to successfully work through these challenges.
Here are a few of the key issues and pressure points in our supply chain:
- Americans are buying again.
- Container Terminals/Ports are full.
- Terminal Hours aren’t long enough.
- Truck Driver Shortage & Trucking Regulation Challenges
- A long list of other challenges and bottlenecks
Americans started making many purchases as soon as the economy opened back up after intense 2020 lockdowns.
This quickly emptied inventories of stores and factories, and thus began a race of imported goods from Asia to the United States in efforts to fill warehouses. As this race began, container shipping lines did all they could to get more goods to the U.S., such as loading empty containers to sail back to Asia (instead of loading with export goods) and adding every available vessel into the loop. Previously, U.S. exports were the back haul to help get containers to Asia, and as rates rose significantly, shipping lines no longer needed export goods to help move containers west. They saw record profits by prioritizing imports, and they have been greedy about it since. These volumes are likely to continue until warehouses have normal inventories, which could easily be through 2022.
Container Terminals/Ports are full.
American port systems were warned of an incoming surge of imports and as expected terminal grounds/extra warehouses all filled quickly. As a result of the surge, containers are being stacked higher and being placed in every nook and cranny to make more room. But that’s not the only issue, the containers aren’t leaving as fast either. Containers aren’t available for a trucker to pick up as soon as they are offloaded from the ship to the container terminal. It may take weeks before a container is unburied from a stack and available for a truck or to be loaded for rail. And of course the trucking issues (more on that below).
So the result of this is terminals that are full of both loaded import containers and loaded and empty export containers waiting to be loaded onto vessels. Which in turn leaves vessels waiting outside of ports until there is enough terminal space for them to unload. Which is why you’re seeing 70+ containers sitting outside of LA/LB.
Terminal Hours aren’t long enough.
In non U.S. terminals such as in Asia, many terminals operate 24/7, maybe closing for some holidays. U.S. Longshoremen say they are willing to operate extra hours, but in a world where no one works for free; there would be a bill to pay. U.S. Longshoremen would charge the ocean terminal, who would then charge the ocean carriers. And unfortunately at this point, ocean carriers aren’t willing to pick up the extra bill for container handling without opening the door to renegotiating contracts. And as you can imagine, currently this is a non-starter.
Truck Driver Shortage & Regulation Challenges
Not only are there not enough drivers, but limited terminal hours and appointments also make it difficult for truck drivers to pick up containers. Some terminals require “dual” transactions, such as, you cannot return an empty import container without picking up a loaded import container. Some terminals won’t accept empty import containers because of the severe congestion, leaving a trucking company’s chassis to be the storage. With the increase in containers physically at the ports, importers have to wait for containers to be unburied. This process is taking up to weeks before it’s even available for them to send a trucker to pick it up. But if marine terminals are going to add extra hours, regulations may also need to change to help make this a successful move in the right direction.
Regulation continues to tie the hands of truckers and the trucking industry. Clean Energy mandates don’t help keep trucks on the road, rules around independent contracting for drivers just add more hoops for truckers to jump through along with added costs get passed on to the customer. The trucking industry and truckers need consistent regulation that they can work with in order to plan out their weeks without going over their FMCSA hours of service. Not only that, they also need the warehouses/distribution centers to have enough staff and longer hours to accommodate additional loads as well. The 24/7 port operation pledge will not work if all the players are not on board.
Long List of Other Challenges.
Everything as you can see is connected, which is why this is not a simple problem to solve. This is also not a problem that will be solved by telling the private sector to figure it out, it won’t be solved by more government intervention, honestly, we don’t know how in the end this will get going in a better direction and unfortunately, it’s going to take a very long time. For now all we can do is continue to flow with the changes, keep trying to be patient and continue to advocate for those things that will make improvements start to happen.
Here is another article that does some explaining from a very firsthand port experience from the CEO of FlexPort Ryan Petersen. I think that this article gives some great descriptions of what is happening, but also offers some great real world solutions that could help right now.
“We must OVERWHELM THE BOTTLENECK and get these ports working again. I can’t stress enough how bad it is for the world economy if the ports don’t work. Every company selling physical goods bought or sold internationally will fail. The circulatory system our globalized economy depends has collapsed. And thanks to the negative feedback loops involved, it’s getting worse not better every day that goes by. I’d be happy to lead this effort for the federal or state government if asked. Leadership is the missing ingredient at this point.”
Will changes be made? Will things start to budge at all? Time will tell. But as BOSSCO said at the beginning of their article, one thing is sure,
“There is no silver bullet. The supply chain is not flexible and we are seeing that in full force…Many are at fault, and many will need to work together to successfully work through these challenges.”
If this blog wasn’t long enough for you….here are a few more articles that give more history and background on the entire supply chain situation.