Progress at Reducing Southern California Port Congestion
The efforts to enhance the movement of goods along the supply chain and specifically to reduce the backlogs at major U.S. ports are showing progress. After weeks of reports about the congestion, carriers, shippers, retailers and the ports all agree that they see progress. Further efforts are planned to continue to build this momentum bring the velocity and fluidity back to the American supply chain.
President Joe Biden yesterday met virtually with leaders for the retailing industry as well as American manufactures and representatives from the ports task force for an update on the situation. America’s largest retailer, Walmart CEO Doug McMillon highlighted the progress resulting from the efforts of the Biden-Harris Port Task Force. He told the group that Walmart has seen overall a 26 percent improvement in the movement of imports and specifically a 51 percent improvement in his company’s throughput at the Southern California ports over the past four weeks.
The Port of Los Angeles and the Port of Long Beach separately also reported that they continue to see good progress. For the fourth time, after meetings with U.S. Port Envoy John Porcari, ocean liner companies, and marine terminal operators, the two ports announced they would again postpone their planned fee on long dwell containers. In a joint announcement, the two ports said that since the fee was announced on October 25, there has been a combined decline of 37 percent in aging cargo on the docks.
The California ports said they will continue to reassess implementation of the fees after another week of monitoring data. However, they believe the efforts undertaken by all the parties and the threat of the fees has helped to get containers moving faster out of the ports. They also highlighted the use of extended hours and incentives for truckers.
To keep the momentum growing, shipping giant CAM CGM Group also announced a new 90-day effort starting December 1 to provide an Early Container Pickup Incentive at the ports of Los Angeles and Long Beach.
The CMA CGM Group, a world leader in shipping and logistics, will implement It will be effective on December 1st and continue for 90 days, to improve the fluidity of the largest import gateway in the United States. The incentive will be provided to the importers that pick up their containers via merchant haulage from all the terminals in Los Angeles and Long Beach in the first eight days, with the intent that they will use it to offset costs incurred by tensions on their supply chains. The incentive will be: $100 per container for daytime pickup from Monday to Friday and it increases to $200 per container at night and on weekends. CMA CGM reports its commitment could exceed $22 million over 90 days.
The carrier also highlighted that it has added 14 extra loaders and increased the number of available chassis by five times since the beginning of the pandemic. CMA CGM is also deploying a full range of solutions to meet the demand, including an increase in capacity up to 16 percent to and from the United States in the coming months.
Further to the north at the Port of Oakland, they also reported some progress after a dramatic decline in volumes in October which they blamed on the congestion at the Southern California ports. Oakland said that some carriers diverted ships directly to Asia, bypassing Oakland, following the crippling delays at Los Angeles and Long Beach. As a result, 43 percent fewer ships stopped in Oakland last month than they did in October 2020.
Even though Oakland did not have the long delays at other ports, they reported 1 20 percent decline in total cargo volume in October, including a 14 percent decline in imports and 27 percent for exports. Through the first 10 months of 2021, Oakland's total cargo volume is up nearly 2 percent.
Oakland, however, agrees that the congestion situation and operations along the supply chain appear to be improving. The port said shipping lines have begun restoring Oakland vessel services suspended earlier in the year, with 61 ship calls last month, compared to 54 in September. An even larger number of vessel arrivals is expected for November.
The White House and the participants in yesterday's conference said that despite the progress the focus needs to remain on improving operations and making longer-term investments in the supply chain to manage future surges.