Regular readers will know that we’re not at all convinced that enough is being done to emphasise the role high demand is playing in the supply chain logjams that are making headlines pretty much every day right now.
With that in mind, we’d like to point you to the latest news from the Port of Los Angeles:
The Port of Los Angeles processed 903,865 Twenty-Foot Equivalent Units (TEUs) in September, the busiest September ever in the Port’s 114-year history. Year to date, overall cargo volume stands at 8,176,917 TEUs, an increase of 26% compared to 2020.
Yes, that’s right, during September, with several Covid restrictions still in place, the port managed to process a record amount of cargo.
The news comes after President Joe Biden said the port would open 24/7 in the run-up to Christmas. We’re not hedging our bets that this will have a drastic improvement in unblocking the US’s clogged up supply chains.
What Biden’s big idea may well do, however, is add to the sense of chagrin felt by workers at the port and other parts of the logistics chain. This could worsen the labour shortages that have been a factor in the supply chain snags seen in the US and in Europe. Workers could refuse to take the longer hours, only exacerbating the logjam.
It’s no surprise then that Gene Seroka, the port’s CEO, paid special attention his own workforce in the press release.
But, of note, he also paid tribute to the railways too:
Despite the global supply chain challenges, the Port of Los Angeles and its partners continue to deliver record amounts of cargo. This is made possible by the extraordinary effort of our longshore workers, truck drivers, terminal operators and so many others on the waterfront and in our region’s warehouses. I’m grateful to all of them. Of particular note is the great work by BNSF and Union Pacific, which have reduced the rail backlog in half in the last month and by two-thirds over the last two months. We’ve got more work to do but we’ve made significant progress due to the collaborative efforts with our Class 1 railroads.
We think this is the right call, not only because workers could threaten to walk out.
What ought not to be forgotten is the extent to which the logistics industry have been under pressure, having to essentially play catch-up for what’s now an 18 month stretch. They have to do so in workplaces where restrictions limit the number of staff that can come in each shift. Many workers have also had to spend time off after either catching Covid or coming into contact with those who have. That record cargoes have been process in such conditions is remarkable.
Yet, as the holiday season ebbs into the New Year and the US economy continues to re-open, it’s not hard to imagine that we’ll see a slow decline in demand for durables begin to set in. After that . . . well, prices should follow suit.
Related links
Snap AV: demand reconfigured – FT Alphaville
The flaws behind Biden’s open-all-hours ports strategy – FT Alphaville
The supply chain crisis and US ports – FT
