California leaders need to implement these solutions to tackle short- and long-term issues at the state’s ports.
By Wendy Estrada, Special to CalMatters
Wendy Estrada is the president of National Latina Business Women Association in Los Angeles.
As the holiday season approaches and post-pandemic demand rises, a bottleneck at two of America’s largest ports in Los Angeles and Long Beach could stunt California’s recovery efforts for years to come.
In recent months, the state has seen an unprecedented number of cargo ships, sometimes upward of 80 ships, forced to wait offshore before unloading cargo. Lawmakers are pushing for 24/7 hours of operation to relieve the pressure, but the issues facing our ports run deeper than simply working around the clock.
State officials should work to resolve this crisis using a holistic approach if they wish to stave off a mass exodus of businesses heading east that will hamper our state’s economic recovery.
As officials work to relieve the congestion, one major link faltering in the supply chain is the lack of truckers. Truck drivers are critical for moving containers in and out of the port, but the inability for many to both drop off empty containers and pick up new ones at the same time has motivated them to make fewer regular trips – let alone extra trips during traditionally off-hours.
Longshoremen are also critical to the efficient function of the ports, as they load and unload containers. With the recent move to extend the port hours of operation to 24/7, extending the hours and shifts of longshoremen as well is needed to accommodate this change.
Beyond the human capacity to relieve port congestion, there’s also a shortage of equipment. Chassis are trailers used to move containers on the ground. For years, China had supplied the majority of these trailers to such an extent that the federal government felt they were unfairly harming production by American producers. Therefore, tariffs amounting to nearly double the value of these chassis were instituted to support American-made chassis for five years. Since then, ports have struggled to keep chassis available when demand surges because domestic production is incapable of meeting supply needs.
Additionally, port property is often used as temporary warehouse space as companies arrange pickup for their containers, even more so now as the lack of truckers continues to backlog the system. To free up workspace and provide more temporary storage, ports have sought temporary use of additional land. Unfortunately, due to provisions in the California Environmental Quality Act, known as CEQA, ports have not been able to temporarily obtain new land to ease the bottleneck and help businesses import products for the holiday season.
However, the negative implications for California will extend far beyond shipping delays on Christmas presents if state lawmakers don’t support a wide variety of solutions. The bottleneck situation at the ports is altering supply chains of major companies that may take years to reverse, hurting the state’s potential to recover from the pandemic-induced economic downturn.
With costs and shipping times skyrocketing for businesses that continue to use the L.A. and Long Beach ports, some are chartering their own ships or considering sending their products to ports in Georgia and New Jersey where shipping has seen less backlog.
If this trend continues, these companies will begin adapting to increased volume on the East Coast, shifting distribution centers, warehouses and operations to the East. This means that if California doesn’t take swift action at the scale this crisis demands, companies may take years to transition their business back to the California market after the ports are finally unobstructed.
Encouraging truck drivers to pick up containers during extended hours and incentivising certification programs for new truck drivers and longshoremen could go a long way toward correcting labor shortages. Removing tariffs from chassis, as well as the CEQA and local regulations that prevent the temporary use of land for container storage, would also help reduce the bottleneck efficiently.
I hope California leaders will continue to work to implement these solutions and advance a holistic strategy that tackles short- and long-term issues at our ports. Otherwise, our Christmas presents, as well as the entire state’s economic recovery, may be delayed.