The Port of Los Angeles Cargo Ship Crisis

As you probably know, a major cause of the recent “supply chain crunch” America and much of the world is experiencing is due to a massive backlog of cargo ships waiting off the Southern California coasts. Around this time last month, a record 62 ships were just sitting there at sea, anchored and unable to dock:

A record 62 cargo ships are waiting to dock at the ports of Los Angeles and Long Beach, and are stuck floating off the coast amid a serious supply chain crunch that could mean fewer toys under the Christmas tree this year.

The problem reflects a combination of growing cargo volumes, a labor shortage and COVID-related safety measures that slow the handling of each ship. About one-third of all imports into the U.S. pass through the ports each year.

The Port of Long Beach has broken monthly records for how much cargo has passed through for 12 of the last 13 months, with 32 percent more cargo processed this year than in 2020, according to the trade publication Supply Chain Dive. Backups at the port as cargo ships wait for berths have been common all year, and have only grown as the peak fall shipping season arrived.

Ships are also backing up at other ports around the country, Bloomberg reported, as it takes longer to move containers from ships to trains and trucks. A shortage of truck drivers to collect and drop off the 20- and 40-foot steel boxes is compounding the problem.

Business Insider reported earlier this month that the ships waiting at sea contain, in the aggregate, nearly 500,000 shipping containers, and that the ports of Los Angeles and Long Beach, which rank #1 and #3 in the US in terms of annual cargo volume, are operating below capacity:

“Part of the problem is the ships are double or triple the size of the ships we were seeing 10 or 15 years ago,” Kip Louttit, the executive director of the Marine Exchange of Southern California, told Insider earlier this year. “They take longer to unload. You need more trucks, more trains, more warehouses to put the cargo.”

Sounds more like a labor shortage problem to me. You have to wonder if the vaccine mandates, and the related grassroots “general strike,” have anything to do with this. I’m sure the media would never tell us, but I suspect it’s part of the problem.

The ports are only operating at 60% to 70% capacity, Uffe Ostergaard, president of the North America region for German ship operator Hapag Lloyd told The Wall Street Journal.

“That’s a huge operational disadvantage,” Ostergaard said, pointing to the fact that the two ports are closed for several hours most days, as well as on Sundays — making it more difficult to keep pace with the ports in Asia and Europe that are sending the goods on a 24/7 schedule.

In September, the Port of Long Beach moved to increase their hours of operation to 24-hours on Monday through Thursday. The Port of Los Angeles did not follow suit, choosing instead to maintain its existing hours. 

Gene Seroka, executive director of Port Los Angeles, said longer hours do little to address the backlog when truckers and warehouse operators have not similarly extended their hours. It’s not optimal for truckers to pick up loads at night, especially when they’d have to find alternative places to store the goods when the warehouses are not open at night.

What’s more, many warehouses near the West Coast don’t have space for the goods. About 98% of warehouses in Southern California’s logistics-heavy Inland Empire region are fully occupied, while the entire Western U.S. has a 3.6% vacancy rate, according to The Journal.

Okay, but why were these hours of operation never an issue before now?

A struggle to hire enough workers has had a tremendous impact on the transportation industry nationwide, causing headaches at ports, warehouses, railways, and trucking. Many companies have fewer workers than before the pandemic but face significantly more work due to the boom in demand for goods since the pandemic started.

This is all the Business Insider piece says about the labor shortage exacerbating the problems at these major US ports. They don’t really delve into why there aren’t enough workers available to unload these ships, and why there aren’t enough truckers available to take the containers from the port to wherever they have to go.

It feels like we’re dancing around the real issue here: why is there a labor shortage?

In the absence of any Official Explanation, we’re left to draw our own conclusions. What I’m starting to think is, if the lockdowns were bad for the American economy, then the vaccine mandates may be even worse.

And over the past month, things have not gotten better in LA. In fact things have gotten worse. American Shipper reports that there are now 103 container ships waiting offshore in Southern California, and that they contain over $22 billion worth of goods.

Notice how things didn’t start to get bad until late 2020, then started to slowly improve, but then, for whatever reason, began worsening rapidly starting in July of this year.

Whatever the reason, the problem is getting worse–the backlog continues to grow.

So a few days ago, the Washington Examiner reported that Florida Governor Ron DeSantis is now trying to convince the shippers who are waiting off the coast of California to re-route to Florida:

While dozens of ships remain moored off the coast of Los Angeles waiting to be unloaded in a historic supply chain snarl, ports in Florida are humming along with little or no delays and are standing by if shipping companies decide to reroute freighters to the East Coast.

Florida Gov. Ron DeSantis, considered a possible contender for the 2024 Republican presidential ticket, recently invited ships to reroute and offload their shipments in Florida, which has several ports. DeSantis warned that the supply chain problems could worsen as the holiday season approaches.

“We’re here. We have capacity,” DeSantis said while visiting the Jacksonville Port Authority, also known as JAXPORT.

So is this a viable option for these ships waiting in California? Florida obviously has lots of ports–Miami, Tampa, Jacksonville, Everglades, Panama City–but I don’t know enough about shipping to tell you whether they have the capacity to handle all these ships. The only thing I know is that the depth of the water in the area around the port is a big deal. The depth of the water determines which ships the port can handle. This map shows how the size of ship the major ports in North America can handle:

The name Panamax comes from the fact that these ships are built to the exact specifications of the Panama Canal. And I mean they’re built to the exact specifications of the Panama Canal, too. They use every last inch of that canal:

And it makes sense because if these ships have to go through the Panama Canal, you can’t really build them any bigger than the canal’s dimensions, even if you have the capability of building a much bigger ship.

But still, they keep finding a way to make them bigger and bigger, which is why you have Panamax ships, and now New Panamax ships as of 2016, enabled by an expansion of the locks. Container ships are measured in terms of TEUs (Twenty-foot Equivalent Units) meaning how many standard 20′ shipping containers they can hold. A normal Panamax can hold 4000-5000 TEUs, but they have ships nowadays that can hold up to like 18,000 TEUs.

Any ship classified as “post-Panamax” or larger is obviously unable to go through the Panama Canal, but most of the time they don’t have to. They can just go straight from China (Shanghai, Hong Kong, Shenzen, Tianjin, etc.) to Los Angeles, normally. It doesn’t make sense to send a ship from China to Miami when you could just go to California or anywhere else on the West Coast. It’s expensive as shit to go through the Panama Canal.

So the question here is, how many of these ships waiting off the coast of California can actually get through the Panama Canal, and then whether the ports in Florida can accommodate them. Plus you have to tack on the fees for going through Panama, fuel, crew wages, etc. It may be cheaper to just wait in California.

Probably, most of the ships waiting in California are not able to go through the Panama Canal, because they were not built to go through the Panama Canal. There would be no need for it.

I went on Google Maps to see exactly how many miles a ship would have to go to re-route from Los Angeles to Florida, and it’s pretty damn far (plus the trip from Shanghai to LA is about 5,700 nautical miles and takes 24 days):

This is inexact of course, but it’s about 4800 miles from LA to Miami via the Panama canal. It’s about the same distance to Tampa. It’s 5200 miles from LA to Houston.

So we’re talking about a trip that’s nearly as long as the original trip from Shanghai to LA.

If you’re wondering about the viability of going west from China instead of East, meaning through the South China Sea, through the Indian Ocean, through Hormuz, through Suez, through the Mediterranean, through Gibraltar, and then finally across the entire Atlantic ocean to the Eastern Seaboard of the US, forget it. It’s over 14,000 miles. Things are really bad right now, but they’d have to get even worse for this to become a viable option.

It’s just a complete mess right now:

Brian Marks, executive director of the University of New Haven’s Entrepreneurship and Innovation Program, said that in some circumstances it can be economically feasible for shipping companies to reroute their ships to other locations because of the high cost of being delayed — although doing so brings with it some logistical obstacles.

For example, if a ship is rerouted from the Port of LA to the Port of Miami, the entire supply chain would have to also be reconfigured, including trucks to ship the goods to their final locations after docking in Florida.

“Delivering elsewhere still requires you to offload, put it on a truck, take it to a warehouse, and distribute,” Marks said. “So having an information system that provides you visibility of the transits of these various modes of transportation that are involved in shipping is critical.”

So it’s not just as simple as diverting the ships to a new port–even though that itself is not simple at all. There are other layers to this that make the matter even more difficult.

Between 80-90% of global trade travels by sea. For most of our lives, the whole process has gone mostly smoothly (with notable exceptions like the Exxon Valdez). Now we’re starting to see what happens when sea trade is disrupted. It has a massive impact on our lives.