President Joe Biden urged retailers and freight movers “to step up” and follow companies like Walmart, Target, UPS and FedEx in making use of expanded hours at the Ports of Los Angeles and Long Beach.
Biden included the call to action in a speech he delivered Wednesday afternoon formally announcing the Port of Los Angeles’ move to a 24/7 schedule. The Port of Long Beach made a similar shift weeks earlier. Together, the two ports are responsible for about 40 percent of container imports into the U.S. The International Longshore and Warehouse Union (ILWU) has indicated its members are willing to work the extra shifts, according to White House intel.
The president characterized the ports’ expanded hours as the result of “weeks of negotiation” between John D. Porcari—the recently appointed port envoy for the Biden-Harris Supply Chain Disruptions Task Force—and unions, retailers and freight movers. By remaining operational through the night and on weekends, the Port of Los Angeles will be open more than 60 extra hours a week, Biden said.
“This is the first key step for moving our entire freight transportation and logistical supply chain, nationwide, to a 24/7 system,” Biden said.
Though the pandemic is certainly the impetus for much of what is producing the West Coast’s ongoing congestion problems, it appears long-standing productivity issues are exacerbating the issue. According to IHS Markit, Asian ports can load or unload a container more than twice as fast as their North American counterparts, taking an average of 27 seconds compared to 76 seconds on large call sizes.
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More than 40 percent of ships at the three major North American West Coast ports have to anchor before loading or unloading cargo, compared to 26 percent in Southeast Asia, 23 percent in Northern Europe and 12 percent in Northeast Asia. North America’s average anchor time of 24 hours dwarfs Northeast Asia’s two hours.
According to Everstream data, vessels waiting at the Ports of Los Angeles and Long Beach idled for 12-13 days on average last month. China’s Yantian and Ningbo ports, meanwhile, had an average waiting time of only three days.
What do most of the leading countries in the world have that the U.S doesn’t? A 24/7 system, Biden said.
“The night hours are critical for increasing the movement of goods because highways are less crowded at night,” Biden said. “In fact, during off-peak hours in Los Angeles, cargo leaves the port at a 25 percent faster pace than during the day shift.”
Biden said Wednesday’s announcement could be a “game changer” if it leads to wider adoption of a round-the-clock logistics environment.
When the White House first previewed the Port of Los Angeles’ move to a 24/7 schedule early Wednesday morning, it highlighted commitments from several major players to utilize the new, expanded hours. According to an administration fact sheet, a promised significant increase in Walmart’s use of night-time hours could raise the retailer’s throughput by up to 50 percent over the next several weeks. Target, which currently moves about half of its containers at night, committed to increasing that amount by 10 percent over the next 30 days. The UPS said its planned changes would allow it to move up to 20 percent more containers. FedEx estimates it could double the volume of cargo it moves out of ports at night.
“This is a big first step in speeding up the movement of materials and goods through our supply chain, but now we need the rest of the private sector chain to step up as well,” Biden said. “This means the terminal operators, railways, trucking companies, shippers and other retailers, as well.”
Though he didn’t offer many specifics on any future potential actions, Biden said he would provide federal support where needed. If the private sector doesn’t “step up,” he promised to “call them out.”
“Our goal is not only to get through this immediate bottleneck, but to address the long-standing weaknesses in our transportation supply chain that this pandemic has exposed,” Biden added, nodding at the bipartisan infrastructure legislation the Senate passed this summer. The $1.2 trillion bill contains $550 billion in new spending, including $17 billion for ports, $110 billion for roads and bridges and $66 billion for railroads.
“The world has changed,” Biden said. “Prior to the crisis, we focused on lean, efficient supply chains. We made no buffer or margin for error when it came to certain parts arriving just in time as needed to make a final product…. We need to take a longer view, though, and invest in building greater resilience to withstand the kinds of shocks we’ve seen over and over, year in and year out, whether it’s the pandemic, extreme weather, climate change, cyber-attacks or other disruptions.”
The president also took the opportunity to once again talk up the need to support and increase domestic manufacturing—something that has gotten particular notice during the pandemic, first as the country faced personal protection equipment (PPE) shortages and more recently because of microchip shortages.
“We need to invest in making more of our products right here in the United States,” Biden said. “Never again should our country and our economy be unable to make critical products we need because we don’t have access to materials to make the product. Never again should we have to rely too heavily on one company or one country or one person in the world—particularly when countries don’t share our values when it comes to labor and environmental standards.”
National Council of Textile Organizations (NCTO) president and CEO Kim Glas said she appreciated the president’s call for more resilient, local supply chains.
“There is a reason we got into this mess and there is a reason we have a global supply chain crisis,” Glas said. “Years of offshoring production in a race to the bottom–exacerbated by predatory trade practices that have undermined so many manufacturing industries–has led to a tipping point.”
Glas, who earlier this month voiced support for the administration’s new China policy framework, specifically called out the United States’ dependence on China
“We must hold China accountable for predatory trade practices that have offshored our industries and our jobs,” Glas said. “We must onshore and nearshore more textile and apparel production chains out of Asia to the U.S. and also to Western Hemisphere trade partners. This has a multitude of benefits to ensure more reliability in production and also has remarkable job benefits to U.S. manufacturers and our allied trading partners who adhere to higher labor and environmental standards. Further, it will help address the migration crisis and grow better paying jobs.”
Biden delivered his speech after a day of talks between government, business and labor leaders. Participants included Vice President Kamala Harris and Transportation Secretary Pete Buttigieg; leaders from the ILWU, Teamsters and AFL-CIO; and CEOs of Walmart U.S., Target, FedEx Logistics, Samsung Electronics North America, the National Retail Federation (NRF), the American Trucking Association, the American Association of Railroads, the U.S. Chamber of Commerce, the Consumer Brands Association (CBA) and the Pacific Maritime Association.
According to a White House readout released after the meetings, the leaders discussed additional solutions to alleviate congestion and improve efficiency, including a temporary expansion of warehousing and rail service, improving data tools and data sharing at the ports, and increasing both recruitment of truck drivers while improving the quality of trucking jobs.
Following the meeting, Geoff Freeman, one of Wednesday’s attendees and president and CEO of the CBA, voiced his appreciation for the administration’s focus on supply chains and applauded the expanded port hours.
“It is imperative that we remember that supply chain bottlenecks not only limit availability of toys and furniture but also of essentials like baby formula and toilet paper, and that the choke points are not only at ports,” Freeman said in a statement.
Freeman listed several recommendations that he said he shared during the talks, including financial incentives to recruit truck drivers, temporary visas to bring in workers to fill in employment gaps, the targeted use of the National Guard to relieve “significant” supply chain congestion, a temporary loosening of regulations and the establishment of a “supply chain war room” that would regularly bring in private-sector experts to rapidly identify problems and solutions. The CBA reported that the White House National Economic Council had indicated it would set up meetings three times a week until the supply chain recovers and that the association would participate.
“We cannot ignore the warning signals of higher prices and reduced availability,” Freeman added. “While our problems will not be solved overnight, with the administration’s engagement we are on a clearer path to tackling the supply chain crisis from every angle.”
NRF President and CEO Matthew Shay also praised the administration’s leadership on port congestion and emphasized the long-term need for a more reliable global supply chain.
“We thank President Biden, Vice President Harris, Secretary Buttigieg, [National Economic Council] Director [Brian] Deese and Port Envoy John Porcari for their leadership to address the ongoing global supply chain disruption,” Matthew Shay, NRF president and CEO and one of Wednesday’s attendees, said in a statement. “It is critically important that we all come together—business, labor and government—to address the current issue regarding port congestion, and the long-term need to create a more reliable supply chain globally and within the United States.
“The retail industry greatly appreciates President Biden’s personal commitment to marshal the power of the federal government behind efforts to reduce the disruptions our members are currently facing, and retailers remain committed to working with all stakeholders to ensure consumers have access to the products and services they want and expect,” he added. “NRF has been urging more focus and resources to address supply chain failures for many years, and we look forward to continued efforts that result in sustainable solutions for this growing problem.”