Analyzing the shipping backlog from an American port
Friday's jobs report offered mixed signals about the state of hiring, but one thing was clear: more people are trying to get back into the labor force. Supply chain issues are one key challenge as companies compete for workers and wait for products to reach customers. Economics correspondent Paul Solman reports from the Port of Los Angeles, where container imports have been clogged for months.
JUDY WOODRUFF: The latest jobs report today offered mixed signals about the state of hiring.
But one thing was clear. More people are trying to get back
into the labor force. Supply chain issues are one key challenge, as companies compete for workers.
Economics correspondent Paul Solman visited one of the busiest ports in the country,
the Port of Los Angeles, to find out more about what's happening.
PAUL SOLMAN: The supply chain symbol of 2021, container ships languishing off the California
coast, waiting weeks on average, some for two months, to get a berth at the ports of
Los Angeles and Long Beach. This ship's main use at the moment? A sea lion's sun spot.
BRIAN KEMPISTY, Founder, Port X Logistics: I have been doing this
for 25 years, and this is unprecedented times.
PAUL SOLMAN: Port X Logistics founder Brian Kempisty.
BRIAN KEMPISTY: Containerized shipping started in 1956. We have never seen anything like this.
PAUL SOLMAN: Pre-COVID, ships rarely anchored offshore. Now they're commonplace,
many dozens of them, loaded with thousands of containers per ship,
each capable of holding as many as 800 artificial Christmas trees, 7, 500 Santa suits.
But there's simply no room to dock, given the record cargo coming in each month.
GENE SEROKA, Executive Director, Port of Los Angeles: More than 900,000 container units,
on average, have been coming through this port since July of last year.
PAUL SOLMAN: Gene Seroka runs the Port of Los Angeles,
the busiest in America, but never this busy.
GENE SEROKA: The cargo coming in from factories in Asia is at all-time highs.
PAUL SOLMAN: Why? Well, since the pandemic, Americans have been on a buying spree.
So many goods have been getting here, that the system is overwhelmed.
GENE SEROKA: Once the cargo ships get here to Los Angeles,
it's like taking 10 lanes of freeway traffic and putting them into five.
You're still moving record volume, but you need even more throughput than you had before.
PAUL SOLMAN: But who in the supply chain is to blame for being unable to handle the throughput?
That depends on who you ask.
ALAN MCCORKLE, President and CEO, Yusen Terminals: So, Paul,
as you can see here, we have stacks of containers.
PAUL SOLMAN: Alan McCorkle is CEO of Yusen Terminals, YTI.
ALAN MCCORKLE: If you look, you can see as far as the eye can see
mountains of containers for the length of our marine terminal.
PAUL SOLMAN: Seventeen thousand containers were sitting here when we visited, more than double
the usual number, nearly half of them empty, since we export so much less than we import.
YTI has leased another 32 acres to make room for them all.
This may look like the source of the bottleneck, but it isn't, says McCorkle.
ALAN MCCORKLE: So, the problem we have is, the boxes aren't moving out the gate as they should.
And that's what's leading to the congestion that we have today.
We're a three-berth marine terminal, which means we can berth three ships at once.
We have two here now. Unfortunately, because the boxes aren't moving out fast enough,
we're not able to work the third ship today.
PAUL SOLMAN: So you have enough excess capacity to handle the huge
tsunami of imports. You just can't get them out of the port fast enough.
ALAN MCCORKLE: Yes, sir. The imports just aren't moving out at the rate and pace they need to
keep up with the amount coming in off the ship.
We're delivering 50 percent of what we're capable of delivering because
the truckers aren't showing up to pull the boxes.
PAUL SOLMAN: So then are the truckers, or drayage drivers,
who transport the containers short distances from the terminal, the main bottleneck?
NIMESH MODI, Book Your Cargo: Now, do we have enough drayage drivers? No.
PAUL SOLMAN: There's already a nationwide trucker shortage.
Nimesh Modi of freight firm Book Your Cargo says the longer waits to
pick up containers are making the job especially unappealing at the ports.
NIMESH MODI: They have to be in the lines for hours. That's a huge problem they're dealing with.
PAUL SOLMAN: Like this driver we met at the Port of Long Beach.
MAN: When you go in, it's a lot of line, big line.
PAUL SOLMAN: And you have to wait a long time.
MAN: We wait, yes, like two hours to go in, one hour. Depends, you know.
PAUL SOLMAN: And that hurts their income, says Modi.
NIMESH MODI: More they drive, more they earn. If they don't drive, and sit at the terminal,
wait for the container, they don't make money. If my life is becoming difficult,
then I'm going to look for something else.
PAUL SOLMAN: But a driver shortage is not the main problem,
says harbor trucking association CEO Matt Schrap.
MATT SCHRAP, CEO, Harbor Trucking Association: We
are the easiest scapegoat in this entire supply chain.
PAUL SOLMAN: You may be the scapegoat, but are you actually also the main point of congestion?
MATT SCHRAP: No, because we have over 14,000 drivers that are operating down here daily.
We have drivers right now who are not being dispatched. We have trucks that
are parked because, literally, we don't have a chassis to move the import off of the dock.
PAUL SOLMAN: Too few chassis. They're the wheeled
metal frames that containers are mounted on to be driven away.
And logistics expert Brian Kempisty agrees. Too many chassis are now stuck
under containers waiting to be sent back overseas.
BRIAN KEMPISTY: That means that chassis is unusable. And that's the issue that we're
having right now, is, there's no available chassis to pick up the full containers.
And we're coming to gridlock.
PAUL SOLMAN: And there's yet another bottleneck
further down the supply chain, says YTI's McCorkle:
ALAN MCCORKLE: While the marine terminals are running predominately two shifts,
seven days a week, first shift, second shift,
I think you're seeing some warehouses only working first shifts and partial second shifts.
PAUL SOLMAN: So we went to the brand-new SEKO Logistics warehouse in Carson, California,
which Brian Baskin oversees.
How much of this stuff, as a percentage, comes from China?
BRIAN BASKIN, Managing Director, SEKO Logistics: A significant portion, probably 70 percent.
PAUL SOLMAN: Trucks haul containers stuffed with goods here to be off-loaded and stored
or reloaded onto different trucks to be transported elsewhere.
But Baskin says there's no bottleneck here.
BRIAN BASKIN: The second we have that container in the door, we're turning that product out
on the road back interior U.S. within 24 hours. So the delay is not in the yard here.
PAUL SOLMAN: Baskin's facility runs two full shifts on weekdays, a Saturday shift,
and sometimes one on Sunday. Working more at the warehouse isn't the answer, he says.
BRIAN BASKIN: By expanding hours doesn't necessarily mean you're expanding capability.
PAUL SOLMAN: And it's hard enough to find workers to cover daytime shifts.
How does the labor shortage impact what we're talking about?
BRIAN BASKIN: If you're talking about the general warehouse market right now,
labor is obviously tight. The rates per hour have gone up $2 to $3 for peak season,
just to attract people to come work.
PAUL SOLMAN: And real estate prices for more warehouse space have gone up even more,
over 30 percent since Baskin acquired this space in February.
BRIAN BASKIN: The landside real estate markets have gone crazy, so there's not a lot of
available space to go into to expand any of the shoreside options that you would have normally.
PAUL SOLMAN: So, in the end,
did any link in the supply chain have enough slack to handle the surge?
BRIAN BASKIN: We were moving in a direction where the growth in the ports every year
was getting harder and harder to manage. COVID just kind of put a nuclear bomb
on top of all that with the volume.
PAUL SOLMAN: And why so little cushion? Because extra space at the port costs money.
Extra trucks and chassis cost money. Extra inventory and extra warehouses cost money.
Thus, for maximum efficiency, American business moved inexorably to a just-in-time supply chain.
GENE SEROKA: Just-in-time and creating lean supply
chains was the focus for the better part of three decades.
PAUL SOLMAN: But, says the trucking industry's Matt Schrap:
MATT SCHRAP: It's important to recognize that the supply chain is fragile.
We, as a country, should really take a hard look of how dependent we are on imports,
and then have much more realistic expectations
about what we're able to achieve within our supply chain to begin with.
PAUL SOLMAN: The good news, perhaps? Importers may be changing how they operate.
ALAN MCCORKLE: I think people are starting to look at how they source their product, and moving away
from what has been a just-in-time supply chain into a, let's get it way well ahead of time.
GENE SEROKA: Now, what we see is just-in-case. On our docks today,
we may see patio furniture and lounge chairs.
Orders have been put in factories ahead of others to build up on inventories across the board.
PAUL SOLMAN: Even so,
everyone we talked to expects kinks in the supply chain well into next year.
For the "PBS NewsHour," Paul Solman up in the air in and around Los Angeles.
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