Q&A with Gene Seroka from Port of LA
High season, for all intents and purposes, is here. There are again 25 or more container ships at anchor in San Pedro Bay off the ports of Los Angeles and Long Beach. The UP and BNSF rail lines have been strengthened so much that they recently slowed the flow of containers from Southern California to Chicago.
With no end in sight, how can the ports on the west coast handle the continuous flow of imports?
To answer this question, American Shipper interviewed Gene Seroka, executive director of the Port of Los Angeles, on Wednesday. Here is a modified version of this conversion:
AMERICAN SHIPPER: There is now a parade of ships heading from Asia to California. With the arrival of peak season freight, new trans-Pacific services, and additional loaders, does Los Angeles have a way to squeeze more productivity from the land side and get by? Or should normality wait for imports to decline?
SEROKA: “The railways are full. The warehouses are full. The port terminals are full. The ships arrive and wait to be worked on. The factories are behind in orders. This incredible demand has caused everyone across the value chain to reach levels we could never have imagined – and it still isn’t enough.
“We still have so much more to come. We were on the phone with a major retailer this morning and they told us they were going to need yet another year to bring inventory to a level they felt was appropriate.
“Something has to settle down. We have 23 ships that are expected to enter the two ports over the next three days. It is quite high. We now have 25 ships at anchor for both ports, 17 of which are headed to LA.
“But, for example, if we suddenly got a break in the warehouse system and a bunch of goods was kicked out after being placed in 53-foot boxes, we could have an immediate dump valve on those terminals. A 60,000 container night race makes us look very, very different tomorrow than what we do now. “
AMERICAN SHIPPER: There have been several times the number of ships at anchor dropped by 10 or more in a single weekend. Is it part of the strategy?
SEROKA: “Yes, it was pre-programmed and scheduled. One of the things that is difficult is to align the truck driver community with these barriers and extra working hours. Because these guys and ladies have the federal mandate of 11 hours of work plus extra time off. So we have to be in real sync with these people to say, “Hey, listen, we’re going to be able to move a ton of cargo on Saturday, Saturday night, Sunday, Sunday night. Can you have the power available? ‘ And they can give up a little work Thursday and Friday, for example.
US SHIPPER: You mentioned warehouses as a possible relief valve. Are you implying that more can be done in warehouses in terms of productivity?
SEROKA: “Absolutely. It works at either end. If the ships slow down for a week on arrival, we could kick some of that cargo out. There would be a little bit of a flow issue to steer the trucks and trains, but at least that would put a dent in the anchors. Conversely, a similar result – perhaps even with faster results – would be in warehouses. You have 2 billion square feet of space. If you could suddenly pull out 53-foot domestic boxes. at an abnormal rate – because these guys are only open 8 to 5 – but if you added night shifts and weekend shifts, we could really clear the air out of those terminals and put that port back in better shape to accommodate this next ship.
US SHIPPER: There is a labor shortage across the country, in many different industries. How much of a factor is this, not only in the warehouses, but in the entire ground logistics system?
SEROKA: “I’m going to divide it into three areas. ILWU [longshore union] the base has been at work between five and a half to six days a week since the start of the pandemic. We added about 1,000 longshoremen and longshoremen in this process and it could be more. Employers and the union have to agree on these numbers as part of the collective agreement, but if we can get more workers, it is even better in my opinion.
“On the trucking side, we have about 18,000 individually registered truckers doing business at this port, of which only half stop at the port at least once a week. With these terminals hyper filled with containers, it slows down the times of trucks. Because we don’t have four tours a day, we only have two, we need more drivers and you still have half the population you can recruit into this business. How fast do sole proprietorships and independent contractors want [resume work at the port] the question remains.
“On the third segment, the warehousing guys, who have been hit and miss throughout COVID. You have a physical distance and the teams that work in the warehouses are now smaller and more distant from each other. With the recovery, some may have given up working in warehouses because these controls met their needs and those of their families. Now, to bring them back, things like rent cuts and moratoriums on evictions and unemployment benefits are starting to decline and expire. So you can see more people in the [warehouse labor] Marlet.”
US SHIPPER: There have been huge challenges on the rail side as well. You reported in mid-June that the train time at the Los Angeles platform was still 12 days, not far from its peak at the start of the year. Then, in July, UP suspended the Southern California-Chicago service for a week, and the BNSF rationed the service for two weeks. How did this affect the port?
SEROKA: “It was a very difficult decision – to suspend the trains from Los Angeles / Long Beach to Chicago – and I think it had to be done. I speak to senior men and women from both companies on a regular, even daily basis. What I learned from UP is that at the time this decision was made, they had 25 miles of trains outside of Joliet. Lo and behold, very soon after, BNSF had 22 miles of trains sitting outside that facility.
“They face some of the same challenges that we face here in Los Angeles. Their residence time for containers, once a train was unloaded, was three times as long as before, before the pandemic, before the surge. Their customers are expected to come during the day and collect their boxes. It was to last more than three days. And their time spent in the streets [at warehouses] was up to eight days old, very similar to ours. So they don’t get the equipment back fast enough. Their normal pattern is around two days of living on the street.
“These guys were like, ‘How many more trains can I put in there because the guys in Southern California are screaming that we need more cars, horsepower and crews to get the cargoes out of the next one. ship. Yes [equipment] is just sitting in Chicago or other places, I can’t get these assets and these teams back. [Pausing service] was a painful decision they had to make.
“Together, about 15% of our cargo was halted at that time. So that hasn’t decimated us, but every container that doesn’t come out of the port creates more blockage here. We are again sitting at about 95-98% of our land use capacity and 80% is considered full capacity for us.
US SHIPPER: How has this emergency service disruption affected rail dwell time in port?
SEROKA: “For the little snapshot that they went into that break, the dwell times went up, as you can imagine, because you have containers that don’t come out. So right now we’re sitting at 13.1 days of rail stay and it’s just outside of the peak we witnessed in February. But then we’ll see it slip away as these Midwestern trains start to build and go.
“What this did was help clean up Joliet to an extent that it is now manageable [in terms of] the cargo they can move through their terminal – and that will speed up the departure of trains from here to Chicago. “
US SHIPPER: Looking at everything that has happened in 2021 – from the rail situation to the anchorages and all the other issues – this has truly been an amazing year.
SEROKA: “And the story is still not over.”
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