The ports of Los Angeles and Long Beach have established a pattern of congestion that practically every sector of the international supply chain predicts will endure at least through the summer — and maybe longer — if second-half volumes do not decline.
According to industry insiders, recent figures on trucker wait times, container stay times, the number of ships in the harbor, and chassis availability have all plateaued, indicating that things aren’t improving significantly but aren’t getting much worse either. Several executives from ports, ocean carriers, intermodal equipment providers (IEPs), non-vessel operating common carriers (NVOs), third-party logistics providers (3PLs), terminal operators, waterfront employers, and the International Longshore and Warehouse Union (ILWU) have met and discussed the issues multiple times.
Material handling systems optimized connections, effective technology, good information sharing, and simplified infrastructure are all essential components of a successful supply chain. Although there are many things that businesses can do to avoid delays and maintain accuracy in their own shipping, receiving, and transportation infrastructure, one important area that can be difficult to manage is ports.
Why Is There Congestion on the Ports of Los Angeles and Long Beach?
The elements below depict the impact of record imports and port congestion in Southern California.
Operational Issues
- There is still a chassis shortage
- The chassis rental system requires more time and moves per delivery, further reducing daily dray capacity
- New Clean Air program requirements have reduced the number of available trucks
- Driver compensation has been reduced due to congestion, making hiring additional drivers difficult
- Lines at the port, on the train, and at the pickup points for chassis
Carrier Issues
- • A 5% increase in volume due to larger vessels arriving with more cargo to load/unload at once
- Confusion about where to pick up and deliver containers due to alliances delivering freight on terminals throughout the port
- Despite the coalition’s efforts to reduce the amount of ships, they prefer to arrive all at once rather than over the course of a week
Terminal Issues
- The union is not providing enough crews to efficiently manage the larger vessels
- Worker productivity in terms of containers handled per hour has reduced dramatically
- Restricted gate hours
- The union is fighting automation of port tasks because it threatens worker jobs
- The union is conducting additional safety checks on vehicles and chassis arriving at the port, which slows down the operation even further
Steps to Take to Mitigate Port Congestion
To restore West Coast port efficiency, four major steps must be taken:
- The issue of labor must be resolved.
- A chassis “gray pool” must be constructed.
- To enhance overall unloading/loading volume, the port must enhance dockside capacity.
- To transport vehicles through gates at a faster rate, automation must be used at all chokepoints.
This congestion can be mitigated by accurate inventory management. Stock tracking on a regular basis might help you avoid stock mistakes and other issues.
Role of Inventory Management in Mitigating the Congestion
The following are some of the advantages of effective inventory management:
- With good inventory management, you can keep track of what you have on hand and order only what you need to meet demand.
- Inventory management lets you keep track of what’s in stock and what’s on backorder so you don’t oversell things.
- Stocks are expensive until they are sold. Storage, handling, and shipping expenses, as well as insurance and employee pay, are all part of the carrying expenses. Inventory is also vulnerable to theft, natural disaster loss, and obsolescence.
- Avoiding stockouts and carrying too much inventory. Better planning and management can assist a business to reduce the number of days an item is out of stock, if at all, and prevent carrying too much inventory.
- Enhanced Insights. Inventory tracking and stock control allow you to readily notice sales trends, track recalled products, and track expiration dates.
Planning for Seamless Transportation
To eliminate duplication and inefficiency, profile your company’s global carriage activities across distinct trade lanes and strategic business units. Longer transit durations between locations of origin and destinations can be better navigated if demand is forecasted and sufficient planning is done ahead of time. Incorporate these profiles into the procurement and contracting processes for transportation.
Change is Beneficial
Manufacturers and transportation carriers alike learned a valuable lesson in the aftermath of the West Coast ports strike of 2002: they can always travel to other ports of entry. Some corporations have yet to return to the Ports of Los Angeles/Long Beach, the country’s busiest ports, preferring instead to enter the country through other West Coast ports or bypassing the West Coast entirely in favor of Gulf or East Coast ports. For West Coast port owners and the International Longshore and Warehouse Union, 2008 is a new contract year.
The Impact of Supply Chain Management on the Port Congestion
Within global supply chains and global manufacturing networks, seaports serve as platforms. As global trade patterns, consumer preferences, and improvements in supply chain management, material handling equipment and information technology alter, these supply networks become more dynamic.
Ports serve as a nexus in supply chains, allowing global supply chains to engage with regional production and consuming sectors. Global supply chains have gotten more complicated, putting pressure on the logistics industry to improve costs, performance, and resistance to disturbances all at the same time. Logistics services that are still valuable may degrade and become basic services, yielding only a modest profit margin. This is particularly true when it comes to physical added value.
Hence, companies engage with external suppliers, internal departments, external distributors, and customers through supply chains. Customer expectations, globalization, technical developments, government regulation, competitiveness, and sustainability issues all influence supply chain management success.
