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Port of LA Director: ‘Historic’ Import Surge Requires Federal Intervention

If there was any way to accurately describe the surge in imports into the U.S. in recent months, Eugene Seroka, executive director of the Port of Los Angeles, may label it best: “historic.”

There’s no doubt that the Southern California port and others have seen a barrage of shipments starting last summer when demand started to swing higher as non-essential stores across the country cautiously reopened. But as the summer wound down and the earlier-than-usual holiday season followed, the spending only continued to increase at record levels.

In a session at Sourcing Journal’s Hong Kong Sourcing Summit, Seroka noted that any month the port processed more than 800,000 twenty-foot equivalent units (TEUs) prior to the pandemic was a “busy month.” But the ecosystem has significantly changed, with March 2021 reaching 957,599 total TEUs. The port could potentially harbor 10 million TEUs for the fiscal year ended June 30, 2021, which would surpass the current 12-month record of 9.5 million units in 2018.

For the first quarter of 2021, container volume is up 44 percent year over year, and for March alone, the ratio of loaded imports to exports remained at about four to one, which Seroka called “the highest gap we’ve seen in recent times.” More than 340,000 empty container units went back to Asia in March, the most empties the Port of Los Angeles has ever exported in one month.

Thankfully, ships either waiting at anchor or in port have reduced in number since their late January/early February peak. While 67 total container ships were in port on Jan. 30, that number dipped to 45 by April 14. And although ships at anchor topped out at 40 on Feb. 1, they have halved to 20.

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The backlog at the ports has made an impact throughout logistics operations on the road. Container dwell time on the terminals still remains an impediment to landside cargo flow, Seroka said.

“Warehouses across the region continue to operate at full capacity,” said Seroka. “Because warehouses are full, container dwell time in the terminals averaged five days in February. The March average was 3.8 days, so we are making some improvement. As containers on chassis wait for warehousing space, our average street dwell times was 6.8 days in March, down from 7.6 days in February. We still need those containers and chassis back at a quicker rate.”

Rail dwell times for containers being transported back to the Port of Los Angeles continue to linger as well, up to nearly 11 days on average in March, an “extremely high” number for the port, said Seroka.

“The rapid succession of vessel calls, inclement weather across the country and the massive surge in imports have made it difficult for the railroads to get rail cars, engine power and crews back to L.A. fast enough,” Seroka said. “Some of our terminals have several thousand or more intermodal containers on their property, awaiting rail transport, and it’s going to take several weeks to clear those out.”

A call to action for federal relief

Declaring that the U.S. freight system is “long overdue for federal investment,” Seroka noted that the American Jobs Plan proposed by the Biden administration “has the framework to make real infrastructure improvements.”

With the plan in mind, the port is planning its advocacy efforts on three areas. The first is the transition of heavy-duty trucks to zero-emission operation units, with calls for “a portion” of the plan’s $174 billion for spending on electric vehicles to transform the the U.S.’s largest drayage fleets. Drayage fleets typically pick up cargo at ports and transport them to distribution centers.

“It would reduce the carbon footprint of every cargo owner that ships goods through our gateway,” Seroka said.

The second key area calls for some of the $100 billion earmarked for digital infrastructure to go toward industrial digitization, meaning that the larger industry would gain access to tools similar to the port’s own Port Optimizer to get goods to American consumers and manufacturers faster. The system aggregates key cargo data and leverages a combination of tools like predictive and prescriptive analytics, machine learning and AI to help companies track their cargo box by box from point of origin to final destination.

The Port of Los Angeles remains the only one in the U.S. that has put a port community system into service, Seroka said, and cargo owners and their partners can sign up to use the Track & Trace functionality to track all imports and exports.

And with Biden’s plan setting aside $50 billion for national infrastructure resilience, the port is advocating for a portion to be allocated to power grid resiliency. Seroka highlighted that last summer, California ports had to shut down various shoreside power operations in the face of heat waves, resulting in increased ship emissions.

“Because heat waves and other climate disruptions face all of us in the years to come, we need to make our power grids stronger and more resilient,” Seroka said.

 

In Case You Missed It: All of the session’s from this year’s Sourcing Journal Hong Kong Summit: “Recovery & Reinvention” are available to purchase and view on-demand. Click here for access.