The Port Of Long Beach Resembles Hwy 5 In Los Angeles
The recent decision by ocean carriers to reduce vessel service at the Port of Oakland and send more vessels to the Ports of Los Angeles and Long Beach has negatively impacted U.S commerce. A record 62 cargo ships are waiting to dock at the ports of Los Angeles and Long Beach, and are stuck floating off the coast amid a serious supply chain crunch being felt by consumers. Peter Schneider, president TGS Logistics said the move by the carriers had hit farmers in California’s San Joaquin Valley (SJV) especially hard since many must now truck their freight to the Southern California ports at a higher rate than when going to Oakland. Many shipping insiders say the problem reflects a combination of growing cargo volumes, a labor shortage and COVID-related safety measures that slow the handling of each ship. About one-third of all imports into the U.S. pass through the ports each year. Schneider said the ocean carriers’ decision makes the supply chain crisis in California worse because there is very little excess truck capacity to move product from the SJV to Southern California at this time: “We are in a crisis and it’s pretty ugly.”
The Port of Oakland reported on September 17th that import cargo volume edged up in August while the number of vessel services has been reduced. The Port said it “received the equivalent of 97,850 20-foot import containers in August. That was up 1.6% from August 2020.” The Port of Long Beach has broken monthly records for how much cargo has passed through for 12 of the last 13 months, with 32 percent more cargo processed this year than in 2020, according to the trade publication Supply Chain Dive. Backups at the port as cargo ships wait for berths have been common all year, and have only grown as the peak fall shipping season arrived. While the ports in southern California are growing, the port in Oakland, California is witnessing a 40% drop in vessel cargo of 68 ships arriving in August, compared to 113 a year ago.” The supply chain problem is leading stores like Costco to limit purchases of toilet paper and cleaning supplies, and even forced Nike to lower its sales expectations for the year after it reported a rare shortfall for sales over the summer.
On September 25, there were a record-breaking 161 vessels in southern California ports, the normal number of vessels before the pandemic was around 60, according to data from the Marine Exchange of Southern California, which operates the vessel traffic service for the ports of Los Angeles and Long Beach. “Consumers have shifted their spending from services to goods during the pandemic, and supply chains are struggling to keep pace,” said Jeffrey Michael, executive director of the Center for Business and Policy Research at University of the Pacific. “The ports in Southern California are actually moving record levels of containers, but they haven’t been able to keep up with increased demand. Shipping experts say that there is a peak customer order season that starts with back to school shopping in September and lasts through holidays in December. The ports can usually handle that surge in shipping containers coming to unload their cargo. But last year things were different due to COVID-related disruptions and labor shortages, according to Kip Louttit, executive director of the Marine Exchange of Southern California. Several carriers rerouted vessels to avoid congestion at West Coast ports that resulted from surging import volume.” The move by the ocean carriers to divert cargo from Oakland to Southern California is contributing to the ships that are anchored waiting to berth and unload at the Ports of Los Angeles and Long Beach. This, by extension, contributes to delays in Asian imports reaching U.S. stores and undermines the efforts of California and other U.S. agricultural exporters to ship their products on the return voyages to customers in Asia before Christmas.
TGS’s Schneider elaborated on the economic losses to agricultural exporters and truckers that the shift away from the Port of Oakland has caused. He said TGS has operated 120-150 trucks per day going to the Port of Oakland and about 25 trucks per day to the Ports of Los Angeles and Long Beach originating from the SJV. These shipments include: dry and refrigerated cargoes and cargo from Northern Nevada: “I should be running 20% to 30% more cargo into the Port of Oakland than I am (today) because many of you cannot get bookings out of the Port of Oakland.” Schneider said that in cooperation with the Agriculture Transportation Coalition (AGTC), he will be sending out the email addresses of top ocean carriers executives in Europe, Asia and the United States for exporters, importers, forwarders and truckers to contact expressing their concerns about the move away from Oakland. Bryan Brandes, maritime director, Port of Oakland told the Propeller Club that “most of the (shipping) lines have said services will begin to be restored in mid-October and November and into December but nothing is firmed yet.” He noted that “MSC (Mediterranean Shipping Company) has announced a new first-port of-call service to Oakland starting in November and CMA will resume their first port of call on a weekly service in mid-October.” Brandes urged shippers, forwarders and truckers to reach out to their ocean carrier representatives to urge them to restore service to Oakland: “the most important voice to the (shipping) line is the BCO (Beneficial Cargo Owner) and their representative.”