Why are California ports still backed up? Port official says there are many reasons
A MARTINEZ, HOST:
Danny Wan is the executive director of the Port of Oakland and president of the California Association of Port Authorities. Danny, there's 80 ships lined up outside of LA and Long Beach. What do you see as the reason why they're backed up?
DANNY WAN: Well, there are several chokepoints in the supply chain. Each link in the chain is contributing to this. One, there is space in the harbors on the land side in terms of availability to store the containers once they're unloaded, then there's shortages of truckers to move that container from the port onto these sites where the warehouses are. There's limitations of warehousing space. And then, of course, there's a rail connection that's also a chokepoint, as well. So each link in the chain has its own problems that's contributing to the backup. Of course, the main cause is the surge in the consumers buying these goods and inability for the capacity to accommodate that.
MARTINEZ: And why is Oakland moving smoothly? Why is Oakland not in the same predicament as LA and Long Beach?
WAN: Well, early on in the surge, Oakland actually did experience a backup. The reason that Oakland, however, was - that - a labor shortage in the beginning that had to be ramped up in order to meet the demand. So Oakland had been able to ramp up its labor. But also partly is - because Oakland is the second stop - as the ships come from Asia to LA and Long Beach, then they go to Oakland to unload the Bay Area and Northern California cargo and allows, importantly, to take up exports before the ships return to Asia. Well, some of these shipping lines have decided that they're going to skip Oakland to make time to go back to Asia faster to pick up more cargo. So therefore, Oakland is now having capacity, and we're urging shipping lines to reconsider and put direct services to Oakland rather than being a stop in the chain.
MARTINEZ: Can some of the ships that are stuck outside of Southern California ports - can some of them just fire up the engines and head up your way to Oakland?
WAN: Well, that's what we're urging them, to not only come to Oakland but also to simply commission some smaller ships with specific cargo for the northern region of our country and Northern California. Just come directly to Oakland and back to Asia. Fully utilize the capacity and the space that's available in the system such as Oakland Port.
MARTINEZ: Danny, why hasn't that happened yet? I mean, LA and Long Beach are jammed, and you mention how Oakland is wide open. Why hasn't all these ships just made that move?
WAN: It is the economics. There is, right now, a price distortion. Cost to ship these containers is about 10 times more than usual. And therefore, it's an incentive for shipping line, first of all, make as few stops in the United States as possible, to simply drop the cargo in Southern California and expect the cargo owners to go from Northern California to go pick it up, rather than having the ships make an extra stop. So there is a price distortion currently going on that's incentivizing this efficient movement to make as few moves as possible by the shipping lines.
MARTINEZ: Well, let's talk about that for a second. So let's just say those boats that are stuck outside of LA and Long Beach do decide to head up to Oakland. What kind of additional resources or money would you need to expand your operations to take some of the load off?
WAN: You know, Oakland is a much smaller port than LA and Long Beach. Certainly, we can't say, move all the, you know, extra capacity up to Oakland, that we're going to handle it. What we're saying is, however, what's happening is that the cargo that's usually destined for Northern California, Nevada, Utah and also the cargo that exports, for example, the agricultural products in California and the Central Valley, they're much closer to Oakland than to LA and Long Beach. What we're saying is that those cargo should continue to come to Oakland directly from Asia without having to stop in LA and Long Beach first and having a special direct service rather than this sort of stopping off at the two ports.
So I think one of the sort of victims of this blockage is our exporters and especially our agricultural product exporters. What they're having to do is not only having to go down to LA and Long Beach to go ship their products, but they're also having to worry about spoilage of some of the products that are time-sensitive. And simply, some of the smaller exporters are just not able to basically continue in this kind of mode of operation.
MARTINEZ: Black Friday, Danny, is just a couple of weeks away. I mean, if the situation at our ports does not improve, I mean, what could the holidays look like?
WAN: Well, I think it's - really, the current disruption is not going to resolve itself by Christmas. And that's unfortunate, I think, that some of the supply chain problems is already going to be impacting the holidays. What we think is important is to solve for beyond that, to make sure that this does not continue for much longer. And I think even longer term, we need to figure out how our supply chain can be resilient for future disruptions or irregular behaviors in consumer spending or even this kind of changed new normal that we need to handle. And we all need to make sure that the ports are economic driver when we grow but not chokepoints. And I think that's what's unfortunate, is as our economy grows, our consumer spending grows, the ports have become a chokepoint in the system, which otherwise would be good news that we spend more, that we have more economic activity. So I think the important thing here is to make sure that this crisis does not continue for much longer and, in the long term, that the ports are actually facilitating growth in the market.
MARTINEZ: Danny Wan is the executive director of the Port of Oakland and president of the California Association of Port Authorities. Danny, thanks a lot.
WAN: Thank you very much.
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