Portamento
The Port of Los Angeles is the number one container port in the US with ~40% of all shipping containers entering the US coming through the port. making it a major hub for products entering the US, moving 9.2m TEUs (20’ equivalents) last year, the 4th highest amount in the port’s history. That said, it would be hard to have missed the images of cargo ships waiting outside of the port for docking and the endless line of semis waiting to be loaded with items from containers. While the problems associated with moving goods from the point of origin to ports such as LA are far deeper than the 15 second snippets that are typically shown when media is cautioning shoppers that they might not be able to get their holiday gifts in time this year, it seemed incredulous that only recently has the port begun working on a 24 hour schedule. After trade issues in 2019 and COVID-19 in 2020 caused holiday volumes to decline at the port, this year both consumer demand and early ordering by manufacturers and retailers has caused the port to become a point of contention for the US supply chain.
But the problem is not only the port itself but the supply chain that works to move all of those items from the port to warehouses and those problems are much harder to fix. Truckers that receive goods from the Port of LA must be licensed to operate at that location. There are 18,000 currently licensed truckers that have access to the port but they tend to work during daylight hours, as do the 13 acres of temporary and dedicated warehouses that are operated by the port or private companies, and we note that truckers are by Federal law allowed to drive 11 hours/day and must rest after two consecutive days of driving. 11 straight hours of driving east (60mph), excluding loading time only gets you to central Texas, so most trips to the east coast are at least 2 – 3 days by truck. With the increased product demand and early holiday ordering, which started in June/July, the port has seen cargo ships waiting for days and weeks to be brought into berths for unloading and containers that have been offloaded waiting for days and weeks to be picked up and brought to their final destination.
Currently ~40% of the cargo that has been offloaded has been sitting on the dock for 9 days or longer and 3 days or longer for cargo to be shipped by rail. The port of LA and the Port of Long Beach have now instituted a fining system (as of 11/1) that will charge shipping companies that keep containers at the port for more than nine days and rail containers for more than 3 days. While the fee ($100/container) is small, it doubles each day, which is an incentive for shippers to get containers out of the port, whether to an interim location or to their destinations, but we wonder whether financial penalties will do anything to alleviate the lack of cross-country transport that seems to be the problem for the port.
The average semi driver makes $27.79/ hour, which puts them a bit below teachers and a bit above construction workers, working between 70 and 80 hours/week. Its not an easy job and most drive trucks supplied and maintained by shipping companies, which leave the driver open to potential problems if they are old or have not been properly maintained while the cost of training for a CDL license runs between $2,000 and $7,000, aside from the license itself. With estimates that the trucking industry is short by over 80,000 drivers, the industry points to the fact that since 2019 the average truckers earnings are up over 25% as an incentive and is one of the few remaining middle-income jobs that does not require a bachelor’s degree, but much of the problem is that truckers are aging out of the category[1] and chassis pools[2] at ports have rules that push drivers to use fee-based pool semis that cut further into driver salaries.
All in, while ports seem to be the focus of media attention (good optics), getting things out of the ports is really where the problems occur and fines might incentivize those who are just using the port for logistical timing. But the problem is pay scales and drivers are only recently seeing pay incentives to fill the gaps that are expected to persist for the next few years. Yes, one day there might be autonomous trucks cruising the highways that will only need recharge stations and not food or rest, but until then it is up to carriers to be willing to pay drivers enough to make it worthwhile to live the on-the-road lifestyle and consumers will have to be willing to bear some of that burden or learn to live without the ‘instant gratification’ that comes with on-line shopping.
[1] According to Bureau of Labor Statistics the average age of a commercial truck driver is 55.
[2] A Chassis pool is a group of semi trucks usually owned by a ship line with the driver forced to use a chassis from that pool or lose reimbursement for the chassis rental from the shipping line.
But the problem is not only the port itself but the supply chain that works to move all of those items from the port to warehouses and those problems are much harder to fix. Truckers that receive goods from the Port of LA must be licensed to operate at that location. There are 18,000 currently licensed truckers that have access to the port but they tend to work during daylight hours, as do the 13 acres of temporary and dedicated warehouses that are operated by the port or private companies, and we note that truckers are by Federal law allowed to drive 11 hours/day and must rest after two consecutive days of driving. 11 straight hours of driving east (60mph), excluding loading time only gets you to central Texas, so most trips to the east coast are at least 2 – 3 days by truck. With the increased product demand and early holiday ordering, which started in June/July, the port has seen cargo ships waiting for days and weeks to be brought into berths for unloading and containers that have been offloaded waiting for days and weeks to be picked up and brought to their final destination.
Currently ~40% of the cargo that has been offloaded has been sitting on the dock for 9 days or longer and 3 days or longer for cargo to be shipped by rail. The port of LA and the Port of Long Beach have now instituted a fining system (as of 11/1) that will charge shipping companies that keep containers at the port for more than nine days and rail containers for more than 3 days. While the fee ($100/container) is small, it doubles each day, which is an incentive for shippers to get containers out of the port, whether to an interim location or to their destinations, but we wonder whether financial penalties will do anything to alleviate the lack of cross-country transport that seems to be the problem for the port.
The average semi driver makes $27.79/ hour, which puts them a bit below teachers and a bit above construction workers, working between 70 and 80 hours/week. Its not an easy job and most drive trucks supplied and maintained by shipping companies, which leave the driver open to potential problems if they are old or have not been properly maintained while the cost of training for a CDL license runs between $2,000 and $7,000, aside from the license itself. With estimates that the trucking industry is short by over 80,000 drivers, the industry points to the fact that since 2019 the average truckers earnings are up over 25% as an incentive and is one of the few remaining middle-income jobs that does not require a bachelor’s degree, but much of the problem is that truckers are aging out of the category[1] and chassis pools[2] at ports have rules that push drivers to use fee-based pool semis that cut further into driver salaries.
All in, while ports seem to be the focus of media attention (good optics), getting things out of the ports is really where the problems occur and fines might incentivize those who are just using the port for logistical timing. But the problem is pay scales and drivers are only recently seeing pay incentives to fill the gaps that are expected to persist for the next few years. Yes, one day there might be autonomous trucks cruising the highways that will only need recharge stations and not food or rest, but until then it is up to carriers to be willing to pay drivers enough to make it worthwhile to live the on-the-road lifestyle and consumers will have to be willing to bear some of that burden or learn to live without the ‘instant gratification’ that comes with on-line shopping.
[1] According to Bureau of Labor Statistics the average age of a commercial truck driver is 55.
[2] A Chassis pool is a group of semi trucks usually owned by a ship line with the driver forced to use a chassis from that pool or lose reimbursement for the chassis rental from the shipping line.
Semi w. Help Wanted - Source: Redwood Logistics
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