Calling on business leaders, port leaders, and union leaders to address the challenges at ports across the country, the Biden administration has announced several actions each partner can take in a “90-day sprint” to ease the current congestion, transportation and supply chain blockages that are disrupting US ports, particularly the ports of Los Angeles and Long Beach.
The objective as stated by Biden is for “the United States, the world’s biggest consumer economy, to operate faster,” and avoid the disruption of goods delivery for the holiday season. The broader goal, he said, is to address long-standing weaknesses in the U.S. supply chain.
The steps announced by Biden to achieve this objective include moves by the nation’s two largest ports, Los Angeles and Long Beach, to expand to 24-hour operations, and big conglomerates such as Walmart, FedEx, UPS, Samsung, Target and The Home Depot to step up efforts for quicker cargo clearance.
The Port of Los Angeles expands to 24/7 operation
The Port of Long Beach expanded operations in mid-September. The Port of Los Angeles is now joining them by adding new off-peak night time shifts and weekend hours. This move by the Port of Los Angeles comes after it achieved a record-breaking backlog in June, making it the first western hemisphere port to process 10m container units in a 12month period.
Approximately 40% of all shipping containers that enter the US do so via these two ports, which are the ninth largest in the world. The ports typically operate five days a week, closing at night and weekends, but the agreed changes will see Los Angeles Port operating for over 60 hours a week, almost double its total earlier this year.
The expansion means that they have nearly doubled the hours that cargo will be able to move out of its docks and onto highways. Biden said the joint effort of the two ports in expanding round-the-clock operations will result in an estimated 500,000 containers waiting on cargo ships offshore being unloaded.
Conglomerates expand hours to move more cargo
In addition to the joint commitments by the Port of Los Angeles and Long Beach in stepping up their round-the-clock operations, Biden has also enlisted the support of the private sector.
On Wednesday 13th October, Biden warned companies that he will “call them out” if they fail to “step up” to ease supply chain bottlenecks ahead of the holiday season.
Biden said: “I want to be clear. This is an across-the-board commitment to going to 24/7. This is a big first step… But now we need the rest of the private sector chain to step up as well. This is not called a supply chain for nothing.”
According to Biden three major carriers of goods – Walmart, FedEx and UPS – have already agreed to intensify their round-the-clock operations to speed the shipment of goods across the country. Target, Home Depot and Samsung are also increasing their work in off-peak hours.
It is expected that the pledges from the six companies will amount to 3,500 additional containers moving each week through the end of the year.
The cause of congestion
The supply crisis is driven in part by the global coronavirus pandemic, coupled with the increased demand from U.S. consumers, warehouse worker and truck driver shortages, and hub slowdowns.
E-commerce in the U.S. increased by 39% in Q1 2021 compared to Q1 2020. As sales of goods spiked, suppliers couldn’t keep up with the demand and faced several difficulties getting goods to the U.S. Soaring freight rates and an extreme space and equipment crunch were among these difficulties, which were navigated by suppliers only for them to face congestion at the ports as a result of inadequate and insufficient port infrastructure.
Biden has further requested the terminal operators, truckers, shippers, and the rest of the supply chain also join the effort. He added that the U.S. should address the long-standing weakness in the transportation supply chain that the pandemic has exposed. Biden went on to say that it is time to improve the infrastructure, alluding to the fact that the time of lean and Just In Time supply chains has gone; the world has changed and supply chains needs to be more resilient.
In the wake of a general acceptance that Just in Time is no longer fit for purpose, Ligentia’s UK Managing Director Anthony Plummer recently shared his thoughts on why it’s more important than ever to plan using the right data, knowledge and insight – and how end-to-end visibility is key for building resilient supply chains. Find out more in our blog: Managing Supply and Demand in a Volatile Environment.