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Port of Long Beach Exec Calls for National Freight Strategic Policy

In a keynote speech at the U.S. Fashion Industry Association and American Import Shippers Association Trade & Transportation Conference this week, Dr. Noel Hacegaba, deputy executive director and chief operating officer at the Port of Long Beach, seemed to channel the Beatles’ lyrics “a little better all the time, it can’t get no worse” when detailing the port’s congestion situation.

“I think all of us would agree that in normal times the supply chain is invisible,” Hacegaba said. “But the pandemic-induced disruption and backlogs that it has triggered across the global supply chain has made the supply chain very visible, some would say too visible.”

Hacegaba said the connection between the supply chain, the economy and consumers has never been clearer or more understood, and “all eyes are on the ports and in our case the ports of Southern California, where approximately 40 percent of the nation’s cargo enters.”

“So, there’s a lot riding on help with the backlog and getting the supply chain back in motion again,” he said. “With the engagement of the administration [and] the cooperation of all segments of the supply chain, I believe we have a once in a lifetime opportunity to reimagine and reinvent the supply chain and not let this crisis go to waste but use it as an opportunity to transform our aging transportation freight network and make it more resilient.”

Hacegaba noted this week’s passage of the infrastructure bill and said the port is encouraged by the prospects of it, specifically the $17 billion allocated for ports.

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“But infrastructure investments are just one way to solve our supply chain challenges,” he said. “We also need policy. We are long overdue to have a national freight policy, a strategic plan…If we’re serious about competing with other nations, we need a holistic, comprehensive and innovative trade policy. In my view, this is the only way we’ll be able to fully maximize historic infrastructure investments.’

In addition, Hacegaba said the country and industry also need to reimagine the supply chain. “We have the tools and technology and even the talent, and with all eyes on the supply chain, I’d like to think we have the will, as well,” said. “It’s the only way we’re going to be able to clear the backlog and demonstrate to the world that we’re ready for more growth.”

The San Pedro Bay Port Complex, combining the Ports of Long Beach and Los Angeles, is on track to handle 20 million 20-foot containers or equivalents units (TEUs), representing a 17 percent year over year increase over last year’s record, he noted.

“As much as we welcome all this new business and celebrate these records, there are other records that we’re not as proud of,” Hacegaba said. “Case in point–vessels at anchor. As of this morning, there were a total of 109 container ships in port. The number of total containerships in anchor as of this morning, were up to 79, and those at birth 30. Believe it or not, this is not the peak. We actually peaked at 83 just a few weeks ago.”

“It’s easy to look at these vessels lined up outside the port and call this a congestion problem,” he continued. “But I think…it’s not just a port congestion problem…It’s important to know that these are just symptoms and there are more.”

These include rail dwell–the average number of days a box sits inside the terminal–a metric used to track how long an intermodal box sits in the terminal. This is now down to five-and-a half days after peaking at 12.4 days in April.

“This improvement reflects the work of the class one railroads what they’ve been doing to unclog bottlenecks and some key inland rail points,” Hacegaba said. “Another metric we track is container dwell time, which measures the average number of days a container sits on a terminal while it’s discharged. Based on the latest reports this is actually up to six days–the highest since September 2020 and more than double what it was before the pandemic. In fact, almost a third of all containers in L.A.-Long Beach today sit longer than five days, which obviously is not what we need to ensure the velocity and reliability that are expected from our gateway.”

The reason for this is because the terminals are saturated and operating at 90 percent-plus capacity, he said, which begs the question of why the containers piling up and ships idling at anchor.

The answers, Hacegaba said, is that the 2 billion square feet of warehouse and distribution center space that supports the ports complex located within 75 miles of the port “is fully subscribed and facing significant labor shortages.”

“And with no place to go, these containers are spending more time at the port and chassis and other important pieces of equipment like vessels at anchor and parked at the perimeter of these warehouses serving as makeshift warehouses,” Hacegaba said. “This takes critically needed chassis out of circulation, rather impacting the ability to deliver empties and pickup imports at port. We need those chassis that are parked around the warehouse containers to be moving containers, we need the trains to be moving, we need those boxes to be picked up, and we need to bring those ships at anchor to birth for immediate discharge.”

Hacegaba presented some of the initiatives the Port of Long Beach has undertaken to add capacity and improve conditions.

Last fall, it opened up a 65-acre site of vacant land for temporary storage of inbound and outbound containers, which he said has “worked just phenomenally.” This week, there were a total of 14,000 containers that were being temporarily stored at the site and additional space is being secured.

Another way the port has injected capacity is the completion of the Long Beach Container Terminal, which is a redevelopment project that was completed in July, introducing 1 million TEU annually and “couldn’t have come at a better time,” Hacegaba said. It is open for business and handling bigger ships and processing more containers.

A “bridge to everywhere” completed in October 2020, called such because it intersects all regions of the U.S., soon to be named the Long Beach International Gateway, has helped expedite and track shipments in and out of the port more efficiently.

“Finally, we’re investing a great deal in rail,” he said. “Rail is a mode that we believe will help us to handle cargo volumes today and in the future. It’s more efficient, it’s cleaner and it’s a product that more shippers are asking about and would like to utilize, and the shipping lines, as well.”

In addition, in response to an agreement with the White House, over the last six weeks, all of the ports terminals are expanding their hours of operation. They’ve been flexing morning and evening gates, which means that they start earlier and close later. Many are opening Friday nights,  Saturdays and Sundays and working with specific shippers to consolidate boxes.

“I know that there are a lot of folks out there who are wondering if 24/7 operations is here to stay or if in fact it’s had any effect,” Hacegaba added. “I will say right now the supply chain is at capacity and this is one way to inject capacity immediately. We realize that…activating our terminals 24/7 is not a cure all. We’re just one switch in a multi-switch process. We need other segments to open up, as well–the warehouses the DCs. The railroads are already 24/7, local carriers. But we believe that if we are going to handle these record volumes in the years ahead, we’re going to have to have a serious look at what it will take to transition the supply chain.”