BETHESDA, Md. — The images of laden cargo ships waiting off the shores of Los Angeles and shipping containers stacked high at the ports last year were frustrating memories for tire and automotive retailers dealing with supply shortages.
While the situation has eased a bit, the ports are "still very much in recovery mode," said Noel Hacegaba, Port of Long Beach deputy executive director of administration and operations, during the recent Auto Care Association's 2022 Business Outlook webinar.
He discussed how the ports in Southern California handle the majority of the nation's imports and yet, despite the disruptions brought by the pandemic, the port operations stayed open every day.
"The bright spot in 2021 is, despite the record volumes, despite tight capacity up and down the supply chain, the ports in southern California moved 20 million container units. That's the highest ever," he said.
Hacegaba said 2021 was a record year with an 18% increase in volume, which, he said, "speaks to the collaboration in the supply chain to move volume through the system."
He acknowledged that 2021 was a challenging year with people shifting their spending from services to goods, which tested the capability of not just the ports, but the entire supply chain.
"I think, generally, 2022 is going to look a lot like 2021 … where the supply chain is going to have to continue to collaborate in extraordinary fashion to help move boxes out of the port terminals and keep the system moving," Hacegaba said.
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He said the Port of Long Beach took three major actions last year to address the over-capacity of cargo:
- The port repurposed 130 acres of vacant land for temporary storage of containers (both inbound and outbound) after the warehouses were full. He said the root cause of the backup was there was no place to store containers once they arrived at the port terminal.
- The port extended the hours of operation in October at terminals, opening earlier and closing later. However, the benefit of later hours was impeded by the lack of chassis and truck drivers available and/or warehouses that weren't open for delivery after certain hours. "All these issues are why we haven't seen extended hours at the terminals fully maximized," he said.
- The port instituted a fee to compel ocean carriers and their customers to move the containers out of the terminals. A vast majority of containers at the terminals were inbound containers that were sitting in the terminal yard longer than nine days, which became a burden because this inhibited more ships from unloading, he said. Since the fee was announced in October. "we haven't had to collect the fee. There has been extraordinary collaboration by carriers and shippers. Since that time we've reduced that category of container by 60%."
Now the number of empty containers at the terminal is steadily climbing, he said. Before the pandemic, the total percentage of empty containers on the terminal was about 25%. Today, they account for 47%.
"We believe that's impeding our terminal's ability to handle more inbound but also exports," he said, noting that the ports are working with ocean carriers on ways to expedite the evacuation of empty containers.
Everything done since last fall is "all in effort to get the broader supply chain to a point and a place where we can be a better, more resilient, more efficient, more agile, more effective supply chain," he said.
