If you鈥檝e never really thought about California鈥檚 ports or the global supply chain before the past month, that鈥檚 normal. But they鈥檙e having problems now, driven by the pandemic, and it鈥檚 causing a shortage of everything from computer chips to kitchen supplies.
California鈥檚 problem is a national one, too: The ports of Los Angeles and Long Beach together bring in So now everyone from port directors to President Joe Biden is interested in fixing the situation.
The backlog鈥檚 origin story is complicated. Early in the pandemic, factories had to shut down or reduce their output. Shipping companies assuming people would be buying less stuff. Protective gear was sent to locations across the globe that don鈥檛 export many goods, so some of those shipping containers didn鈥檛 get returned.
Then, people did buy stuff 鈥� a lot of stuff. Warehouses struggled to hire enough workers to keep up with demand and they started getting backed up, leaving containers full of new goods at the ports, where they started to create traffic jams, said Chris Tang, a professor at UCLA鈥檚 Anderson School of Management who studies supply chain issues.
This , California lawmakers talked with experts and stakeholders about what the state could do in the near term to resolve the backlog, and in the longer term, to prevent similar backups in the future.
鈥淚 mean, the simple answer to this crisis is that people stop buying stuff, but that鈥檚 not going to happen,鈥� said Assemblymember Patrick O鈥橠onnell, a Democrat whose district includes both the ports of Los Angeles and Long Beach. 鈥淪o we need to respond, and we need to respond quickly.鈥�
Already, federal, state, and local policy makers have taken action. On Oct. 13, Biden announced the Port of LA would operate around the clock, a decision that came after the Port of Long Beach also decided to extend its hours. A week later, Democratic Gov. Gavin Newsom signed an directing state agencies to look for land that could be used as temporary storage, identify freight routes that should be exempted from vehicle weight limits and identify training partnerships with private industry for port and logistics workers. In late October, the federal Department of Transportation said it would offer billions of dollars in loans to shore up California鈥檚 port and supply chain infrastructure. At the local level, authorities have allowed containers to be stacked four high, rather than the usual two, and said companies would be .
But, experts say the backlog may not be resolved until sometime next year. In the meantime, loitering ships are causing pollution and businesses across the country are facing shortages.
"It has become clear that this is a multifaceted problem, and it will require multifaceted action,鈥� said O鈥橠onnell at the hearing. 鈥淭here is not one switch you can flip.鈥�
So what can the state of California actually do to help?
Find land that can temporarily store containers
Dee Dee Myers, director of the Governor鈥檚 Office of Business and Economic Development, said the solution she鈥檇 heard most frequently is for the state to identify parcels of land, either inside or outside port complexes, that can be used as additional temporary storage for containers.
Myers said the agency now has a list of several dozen potential sites, though there are complications for each. The government has a deadline of Dec. 15 to complete its survey, though they may be done sooner, Myers added.
Using other locations as temporary storage is something that private marine terminal operators have been doing for some time, said Robert Leachman, a professor in UC Berkeley鈥檚 Industrial Relations and Operations Research program. It makes sense, he said, as a short-term solution.
But leaving goods strewn across Southern California could create new problems, such as how best to retrieve them later and negotiate with communities opposed to having a ton of big rigs coming and going, experts said.
Grow the truck driving workforce
Contributing to the backup is a shortage of truck drivers. Truck drivers are independent contractors and are paid per delivery rather than by the hour, Leachman said. When they鈥檙e stuck waiting at the ports for hours to get their container, it means they鈥檙e working more hours for the same take home pay. Fewer drivers are willing to take that deal.
There鈥檚 also a shortage of warehouse workers. 鈥淭he jobs are hopelessly unattractive so we can鈥檛 get enough people to fill them,鈥� Leachman said. He thinks wages will need to rise to fill those positions.
California transportation secretary David Kim said he鈥檚 met with the White House, the Governor鈥檚 Office of Business and Economic Development, California鈥檚 Labor and Workforce Development Agency, and the Department of Food and Agriculture to discuss driver recruitment and retention. The federal transportation department will also be working with states to .
The state can work with universities and community colleges to provide technical training and build the pipeline of people prepared for trucking and logistics jobs, said Nick Vyas, a professor at the University of Southern California鈥檚 Marshall School of Business. But in the longer term, if it鈥檚 hard to interest enough workers in these kinds of jobs, automation may be part of the solution, he said.
Tang agrees. In the short run, there鈥檚 a huge need for truck drivers, but, said Tang, 鈥淚 think that the long term prospects for truck drivers (are) not good.鈥�
Suspend regulations and laws
A coalition of more than a dozen business groups sent Newsom a requesting that he suspend several regulations and laws to help solve the supply chain issues. Among their proposals:
- Suspend a variety of environmental regulations and pollution laws;
- Suspend the state鈥檚 landmark worker status law passed in 2019 that reclassified many independent contractors as employees;
- Suspend a new law passed this year which requires warehouses to disclose to workers any quotas or work speed standards.
A quick response came from Assemblymember Lorena Gonzalez, the San Diego Democrat who introduced both worker laws. She that the does not currently apply to truck drivers; a battle over an exemption for the drivers is currently . Additionally, the warehouse law isn鈥檛 slated to go into effect until January of 2022, leading Gonzalez to call the proposals 鈥渄eceptive.鈥� She also said the shortage of truck drivers has been decades in the making, driven by deregulation of the industry and decreasing working conditions.
鈥淚nstead of offering good-faith proposals that address the underlying problems contributing to labor shortages and congestion at our ports, the industry-backed proposal is a thinly veiled attempt to cut costs on the backs of essential workers and skirt future enforcement efforts,鈥� she wrote.
When asked if the administration would reconsider laws regulating warehouses, Myers didn鈥檛 offer a conclusive response. 鈥淚 think we鈥檙e willing to look broadly; I think there鈥檚 some things that we won鈥檛 be willing to change,鈥� she said. She also said the administration may relax regulations such as some weight limits for trucks.
An inland port?
Another, longer term solution suggested was the creation of an inland port 鈥� sometimes called a dry port 鈥� to function as a distribution point for incoming goods. Inland ports are connected to sea ports by road or rail.
鈥�An inland port in the Central Valley would do wonders in terms of relieving choke points, and facilitating the movement of cargo from the San Pedro Bay ports up to northern and central California by truck or rail,鈥� said Transportation Secretary Kim at the hearing. He said a proposal is currently being developed by the Fresno Council of Governments, which has secured a $1 million grant from the federal Transportation Department to study the idea.
This would alleviate some of the pressure at water ports, Vyas said.
But Leachman is dubious of the value of a new inland port. It would require building additional terminals for cranes to unload containers, he said, which is costly. He contends those investments could be better made elsewhere. If a new inland port was built somewhere in the middle of the state, like Fresno, it could result in a lot of extra miles for truck drivers. Most of the distribution facilities are in the Inland Empire and near Southern California ports.
鈥淚f you end up needing to go to those warehouses anyways, it鈥檚 sort of wasted miles right? You go to Fresno, they鈥檙e going to have to double back to Ontario or Pomona,鈥� Leachman said.
So how much can the state really do?
In short, not a lot, Vyas said. The California ports are just one point in the very long supply chain 鈥� stretching from manufacturers across the globe, to consumers in small Midwest towns and large East Coast cities. California鈥檚 state government has limited influence on the international actors involved, and the millions of consumers across the U.S. who order goods. There aren鈥檛 quick fixes for growing the warehouse and truck driving workforces.
But the issues could be resolved before too long anyway: Tang expects things will calm down by February or March of 2022.
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