From Chaos To Complicated-Pt. 2

A Basic Concept of Operations for Resolving the Port Congestion at Los Angeles and Long Beach

This is a written-form version of the podcast released on 10 October, also available on Spotify and Apple Podcasts.

INTRODUCTION

The ongoing pandemic-driven supply chain crisis has particularly impacted the Ports of Los Angeles and Long Beach in 2021. As the crisis has metastasized throughout the United States’ logistics network, more import freight has concentrated than ever before into the thirteen container terminals at the two ports. This is due to numerous factors, including but not limited:

• Shortest transit from Asian base ports

• Ability to berth and discharge most Ultra-Large Container Carrier ships in the Transpacific service strings

• High throughput on dock for ships at berth

• Heavy density of major importers with local distribution center operations through Los Angeles and Orange Counties, as well as the Inland Empire

• Ocean carriers refusing to allow for inland rail service due to slow rail turn times

Further hampering container “churn” in the region is reduced man-hours available for unloading containers at warehouses and distribution centers, as well as the durable long-term issue of drayman and chassis shortages. Consider this root cause analysis:

Each of these domains of constraint must in some way be considered, and if possible, mitigated in a synergistic way that does not create worsening ripple effects in other domains.

MISSION

The goal of this proposal is to reduce operational constraints on the Los Angeles and Long Beach container terminals and stakeholders by:

1. Breaking import/export transportation operations into smaller domains of activity;

   1. Ship to shore

   2. Terminal to rail

   3. Terminal to importer

   4. Empty import container to drop lot or exporter

   5. Drop lots to terminal or exporter

   6. Export reload to terminal, if applicable

2. Increasing the pool of operations personnel by reducing risk below regulatory thresholds; and,

3. Accelerating churn of equipment from port to unload and back to port, or port to inland points and back.

The initial target reduction time per container is five (5) calendar days, increasing to ten (10) by the end of sixty days.

EXECUTION

1. Activate NIMS

   1. Governor declares State of Emergency

   2. Select Incident Commander, who will delegate a Public Info Officer (external comms), Safety Officer, and Liaison Officer (internal comms)

   3. Select general staff leading Ops, Planning, Logistics, and Finance/Admin

   4. Fusion should include:

      1. Municipal, county, state transport/infrastructure and law enforcement

      2. DOT (especially MARAD), DHS (especially CBP), FMC, Commerce

      3. Constituent unions (ILWU and Teamsters)

      4. Port/terminal leadership

      5. Single rep for ocean carriers

      6. Single rep for chassis operators

      7. Single rep for draymen

      8. Liaison rep for BCO’s

      9. Resource rep for real estate

2. Incentivize return to work for warehouse/parcel/carrier labor

   1. Funding released from disaster, general, transportation, and special funds

   2. Bonuses for Return to Work

   3. Overtime is income tax-free through end of 2022 for FT labor and all wages income tax-free for PT/seasonal labor

   4. Subsidies for transport and child care for warehousemen, longshoremen, and CDL drivers

3. Secured container drop lots/depot for empties around Los Angeles, Inland Empire and Orange County

   1. 24 hour access for draymen

   2. “Open pool” format - use street turn software to enable mixed-trucker interchange

   3. FIFO (first in, first out) management

   4. Container and chassis inventory linked to all terminals

   5. Potential locations:

      1. Offseason sports stadiums: Angels, Dodgers

      2. Vacant lots of size: 825 Lexington-Gallantin, South El Monte

      3. Airports: FUL, TOA, CPM

      4. Military facilities

   6. Rent paid to landowners, and if land improvements or zoning changes are made it does not increase the tax base of the parcel for ten years

4. “Night shift” express routes opened between drop lots and ports for exclusive use of trucks returning containers

   1. 8 PM to 5 AM - currently, only 30% of appt slots are filled at night

   2. No law enforcement stoppages due to tail lights/registration issues/etc

   3. Moving violations only when impacting safe operation of vehicles

   4. Hours of service increased

   5. Trucks that are non-compliant with CARB receive 180-day waivers provided they are for exclusive use of alleviating port congestion

   6. “Bridge law” weight restrictions waived or raised substantially to allow for tandem-haul containers

   7. Classify empty-only moves on these routes under farm truck rules - in CA this is called the “implement of husbandry” exemption - to include waving of on-highway distance restrictions and speed limits

5. Activate Nat’l Guard and bring in multiple state NG’s under NIMS to shuttle empties and “sweep” DC’s of empties

   1. All trucks with a fifth wheel, as well as available CONEX chassis

   2. 10 hours training on dray and port ops

   3. No CDL requirement

   4. Could also potentially train a force to act as emergency longshore labor in the event of port disruption - gantry operators, top handlers, side pickers, etc

6. FMC to ban carriers and ports from charging demurrage and detention for next 180 days, with a $1,000 cap per container for any outstanding. This might best be framed as a “reverse General Average”.
   

7. Use Defense Production Act to secure all raw materials and production required for new chassis and containers built in North America, and eliminate tariffs on overseas-produced newbuild chassis for 180 days

Other potential resources not fully vetted as of right now:

• Flattop/deck barges for on-water empty container storage or cabotage operations

• Crane barges for ship to shore at emergency “ports”

• Availability of “seahorse” ships to carry coastal freight to OAK and turn big ships faster from USWC back to Asia

• Local rail freight yards with lift capability to serve as shuttle rail terminals and allow for staging for inland moves - eases congestion of on-dock ops

• Available Nat’l Defense Reserve Fleet ships under MARAD RRF or retention status

  • Also drives requirement to release add’l funds under DPA for rebuild/repair and newbuild

  • See this incredible video by Professor Sal Mercogliano for discussion around using NDRF to support mitigating the port crisis

CONCLUSION

A plan of this scale and complexity necessarily requires a whole-of-government approach combined with the ingenuity and flexibility of the private sector. It will require vested interests to set aside their intermediate- and long-term agendas, from upcoming labor negotiations to quarterly earnings statements to political electioneering. Breaking through these considerations is why I consider the use of NRF/NIMS to be foundational to this proposal, as well as selecting the right Incident Commander to lead the response. Of those who are best-equipped to do so, I would nominate Ryan Petersen, the CEO of Flexport, with others such as myself in advisory capacities. Now more than ever, we need adaptive thinking and selfless regard for the economic and national security of our great nation. I stand ready to assist, as do many other talented and committed experts. Let’s get to work.

Dum spiro spero,

RK

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