Massive bottlenecks and backlogs in southern California are disrupting the global supply chain, leading to a shortage of everything from computer chips to kitchen supplies.
The ports of Los Angeles and Long Beach together bring in 40% of all goods shipped to the country by water, but these harbors are struggling to keep up with the influx of containers full of new goods coming in.
In mid-October, President Joe Biden announced that the Port of Los Angeles would operate around the clock, a decision that came after the Port of Long Beach also decided to extend its hours. Despite these measures, state officials are still working to find ways to increase the operational capacity of both ports.
The backlog’s origin story is complicated. Early in the pandemic, factories had to shut down or reduce their output. Shipping companies reduced their schedules, assuming people would be buying less stuff. Protective gear was sent to locations across the globe that don’t export many goods, so some of those shipping containers didn’t get returned.
Then, people did buy stuff — a lot of stuff. Warehouses struggled to hire enough workers to keep up with demand and they started getting backed up, leaving containers full of new goods at the ports, where they started to create traffic jams, said Chris Tang, a professor at UCLA's Anderson School of Management who studies supply chain issues.
On Wednesday, Gov. Gavin Newsom toured the ports and announced that, starting Nov. 19, Caltrans will begin accepting applications for trucks moving from statewide ports and distribution centers to carry heavier loads of up to 88,000 pounds on state and interstate highways.
But in the Bay Area, the Port of Oakland faces a completely different situation. The executive director of the port, Danny Wan, shared with state legislators earlier this month that Oakland actually has a lot of spare space.
"You look at the Bay and the whole terminal is empty," he said. "Empty of containers. Empty of ships. And the operator tells me that this is the first time in the history where they’re operating Oakland that they have not one vessel call."
KQED spoke with Wan, who also serves as president of the California Association of Port Authorities, this week to better understand the current situation in Oakland and how he proposes to overhaul California's port infrastructure.
The following interview has been edited for length and clarity.
KQED's Brian Watt: Has the situation at the Port of Oakland changed since you met with legislators?
Danny Wan: We have three terminals at the Port of Oakland and we're about 75% capacity. We're talking to the shipping lines about returning some [shipping] to Oakland, and [we're] not talking about shipping the stuff that usually goes down to LA and Long Beach in normal times, to come to Oakland. Some of the things that normally do come to Oakland, all of a sudden in this kind of disruptive environment, have now started to go down to Long Beach now instead of Oakland.
There are two international trade routes that are starting up this month docking at Oakland. Are they in response to the situation that has developed in Los Angeles and Long Beach?
Normally what happens is that the shipping lines do a route from Asia to Los Angeles-Long Beach. They drop the cargo down there that's destined for the southern California routes. And then they come up to Oakland. and they pick up exports and they also drop off what's destined for northern California. What's happening now is that they're skipping Oakland because they want to get their containers back. They're simply dropping all the cargo off in Los Angeles-Long Beach and expecting northern California export-importers to go down to Los Angeles into that congestion and do their business.
These two new trade routes are direct shipping lines coming to Oakland — not to Los Angeles-Long Beach. They're first coming to Oakland to drop off the imports and pick up the exports and go back to Asia directly so that we have a direct route … that is perfect for us, that is efficient, that is going to serve the people up here and we hope to have more of those kind of routes starting up.
What is your suggestion for what could be done to help push through some of the bottleneck issues we see at the ports?
There's a lot of discussion about whether we can relieve the congestion for Christmas. I unfortunately got a report that this congestion problem is not going to be solved by Christmas. What we need to do is make sure that this congestion problem does not last very much into the new year.
One of the solutions I'm suggesting is to use our maximum capacity, including the Port of Oakland. We have another 25% capacity. We could help relieve that congestion down south. I think that there needs to be some kind of discussion about coordinating the various parties in the supply chain in terms of moving, making space available and getting more information to our shippers … to have some clarity as to when the schedule is, when they can get spots, when they can get their containers so that people can coordinate the system better to make it flow more smoothly.
But in the long term, there's an issue. California ports are especially underinvested. We need a coordinated effort from the state and the federal government to make more investment into the supply chain in California, both in terms of dock space, dock improvements, but also workforce training as well as other issues, like inland warehouse development.
Do you feel that the recently approved federal infrastructure package, which includes $17 billion for infrastructure at ports, is a start?
Absolutely. I appreciate the Biden administration recognizing that this is an important investment in the package. But I think one of the issues that we need to bring out … is that California ports, compared to, for example, the Gulf ports of the East and the South are having an investment disadvantage of about 11 to 1. In other words, for every dollar they invest in the West Coast, in California ports, 11 dollars are invested in other ports on other coasts. So California is way behind.
We need to have a California-coordinated freight policy that not only makes sense of the capacity issue — where we ship the goods, but also in terms of investing, having a plan to invest so that we can compete for that federal investment that's coming in with the infrastructure package.
This post includes reporting from CalMatters's Gal Gedye.
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