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Home » Government’s supply chain efforts fall short as peak season looms

Government’s supply chain efforts fall short as peak season looms

Expanded port hours will do little to alleviate the nation’s broader supply chain problems, experts say.

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October 15, 2021
Victoria Kickham
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Industry analysts say attempts to expand operations at the ports of Los Angeles and Long Beach will do little to improve the nation’s supply chain woes, citing broader challenges and a longer road ahead to managing the accelerating volume and tight capacity that has defined supply lines this year.

The reaction comes in response to the Biden Administration’s efforts this week to move the ports of Los Angeles and Long Beach toward 24/7 operations, which port officials say they are working quickly to accomplish, although they have given no timeframe for when the expanded operations will begin. In a press conference Thursday, Port of Los Angeles Executive Director Gene Seroka said discussions between port officials and the various stakeholders at the port—cargo holders, ocean carriers, trucking companies, equipment operators, labor unions, and so forth—began Thursday and that all the players are “moving as fast as possible” to make it happen.

As of Thursday, there were 62 ships at anchor outside the Port of Los Angeles, with another 25 due to arrive within days, Seroka said. Cargo volume through the port has increased about 30% this year. In September, the port moved 748,472 twenty-foot equivalent units (TEUs), down about 6% compared to record-setting September 2020 volume and marking the second-busiest September in the port’s history.

Expanded operations may help ease the situation, but it’s not a long-term fix for the slowdowns the nation has been experiencing, experts say.

“There’s really not a lot the ports or supply chain participants can do this year, or even possibly next year,” to alleviate overstressed supply chains, said Brian Whitlock, senior director analyst for consulting firm Gartner. “The challenges they face are significant and much more broad. It’s not just a physical issue. It’s terminals, technology, chassis availability, infrastructure, and it’s labor. Moving containers out of that port is great—that’s what needs to happen to unload the ships idling at sea, but it’s going to do very little to change the landscape of the backlog today, and certainly does little to affect the holidays or year end.”

Sebastien Breteau, CEO of global supply chain and compliance service provider Qima, agrees, emphasizing that the Biden plan only addresses part of the problem. With Thanksgiving and associated peak holiday shopping season just six weeks away, he says the plan is unlikely to move the needle very much.

“The 90-day sprint that the Biden administration has planned will help alleviate some of the challenges that we’re facing within the supply chain. However, the administration’s plan focuses on the end pieces of the chain when we’re seeing that there are issues and challenges at every stage currently,” according to Breteau. “This will continue to put pressure on supply chains, especially as we head into holiday shopping season. Consumers should still expect lengthy delivery windows, supply shortages, and potential quality issues as factories scramble to fulfill orders as quickly as possible and meet delivery deadlines.”

Strong consumer spending and accelerated e-commerce volume are expected through the end of the year, according to freight forwarder and customs broker Flexport, which publishes a monthly report on goods demand based on proprietary shipping data. That demand will stress the trucking industry as well as ports and will take time to work through, according to Phil Levy, Flexport’s chief economist.

“The unusual pandemic-era demand for goods has exceeded the effective supply capacity for far longer than the system is designed to handle, but supply capacity is very hard to change quickly,” Levy said in a statement. “It takes time to build new ships, expand ports, or recruit and train new truck drivers. In opening the Port of LA full-time, the next question will be whether or not there are enough trucks to carry out the additional volume and how efficiently they can get in and out. The administration can and should make the system more efficient, but the core problem will still come down to demand, which our Flexport Platform data doesn’t forecast to recede anytime in the near future, barring an income shock.”

Gartner's Whitlock added that the larger question moving forward is how the Biden administration will engage with ports, terminals, shippers, transportation companies, and the like in a conversation about what can be done to address the broader problems affecting supply chain productivity—including the need for digital transformation, visibility, and transparency; making supply chain careers more attractive and competitive; and addressing automation and infrastructure challenges.
Logistics Ocean
KEYWORDS Flexport Gartner, Inc. Qima
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Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.

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