Carriers need to meet their scheduled port calls, yet are unable to do so because of the log jam at major ports, particularly in China and Los Angeles/Long Beach. During the days of Liner Conferences, but also later with Alliances, carriers used to incorporate sufficient slack time in their itineraries to ensure they met their scheduled arrivals and departures. Typically, marine terminals have vessel windows for carrier port calls and delayed arrivals or departures can create havoc in a terminal’s operations. In the Port of Los Angeles/Long Beach, there are currently more than 100 ships in the queue waiting about 23 days for berth availability. The queues effectively remove vessels from the market, which leads to the higher freight rates we are currently observing. Indeed, carriers have canceled ports of call or even entire voyages (referred to as blank sailings and blanking a string, respectively) to catch up on their service routings.
There are several reasons for the long vessel queues at ports, but they primarily concern the port’s inability to expeditiously evacuate containers, leading to terminal capacity shortages. Shortages in port labor, truck drivers, chassis, and warehousing contribute to this problem, bogging down the flow of containers to and from the port’s marine terminals. In such scenarios, many ports were forced to search for solutions on an ad hoc basis because, as it seems, supply chain system contingency response plans were not in place to address supply chain disruptions holistically.
For example, secondary ports such as Hueneme, about an hour’s drive from the Port of Los Angeles/Long Beach, are being called into service to provide complementary capacity; the shipping industry is transshipping containers in Panama for routings on smaller vessels to Hueneme, and the small ships carrying reefer containers, already calling Hueneme, are also taking on dry containers in their calls there. These actions are intended to help mitigate the congestion problem in Los Angeles/Long Beach. While Hueneme does not have the channel draft for accommodating the large capacity vessels that call Los Angeles/Long Beach, it may also be worth exploring the possibility of discharging containers from anchored vessels onto barges, a concept similar to the midstreaming operation deployed in Hong Kong. The discharge operation can be done by four barge-mounted cranes at a rate of about 8 moves per crane-hour. Once discharged from vessels, containers could then be shipped unhindered by navigation constraints to secondary ports and discharged using relatively cheap reach stackers, decreasing cargo handling demand at the berths of congested ports.
Quick evacuation of containers from the port is also stymied by shortages in container storage areas. All around the Los Angeles metropolitan region, containers are seen scattered throughout the land, on streets, and outside warehousing/distribution yards, which have no more space. This is the case despite the carriers shipping empty containers to Asia where they command much higher prices vis a vis those normally paid by US exporters. As a matter of fact, it was this lack of container availability for US exporters that led to recent shipper complaints to the FMC. Many months after signs of the impending congestion appeared, the Port of Los Angeles is making available two unfinished facilities for storing empty containers and is planning a container storage lot. While these will help de-clutter the container terminals, it is worth noting that the planned storage lot will not become reality without review by nearly 20 government bodies; still, the review was expected to be completed by the end of January 2022. Having said this, an existing contingency response plan for handling disruptions would have identified such areas for storage use with the necessary approvals already secured from relevant authorities.
As a temporary measure, it would seem large-scale parking lots in Los Angeles, of which there are many, could be enlisted for buffer (short-term) storage. There are about 12 Walmart Supercenters, 15 Sam’s Clubs, 17 Home Depots, 25 Lowes, and 30 Costcos in Los Angeles County. Real estate investor CBRE indicates that most cities require five parking spaces per 1000 square feet of retail space, meaning that there are an awful lot of parking spaces that are increasingly unused as e-commerce sales rise. Many of the big box stores already store containers carrying goods for stock replenishment. Perhaps the big box store parking lots, as part of the noted contingency response plan, can be used (even for a fee) to allow short-term (overnight) buffer storage of containers in times of supply chain emergencies.