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Global Customs and Trade Consultant, Pete Mento, shares his thoughts on global port congestion…
One of the most frustrating habits I seem to have recently formed is talking about events of what I believe to be the recent past, only to realize it was a very long time ago. And I don’t mean a few years, I mean decades. And then I have to accept the painful reality that not only am I getting older, but I am turning into one of those cranky, curmudgeons that never seems to miss an opportunity to tell the new generation of logistics professionals how much better everything was when I was younger. If I don’t watch it, I’ll find myself grabbing dinner at 4.30 and making sure I get home in time to watch the latest rerun of Matlock or Murder She Wrote before I hit the sack at 7PM with the rest of the angry old codgers.
I found myself struggling with this realization when I was recently talking to a friend about the latest global port congestion issues we are dealing with. My point to her was I can’t seem to remember a time in my (gasp) over 30-year career when we didn’t seem to have issues with port congestion. And I mean that – not ever.
Of course, some years, like this one, are worse than others. But, my point was that we have always managed to simply deal with the issue of congestion and the frustrating disruptions that it causes. When I was first at sea on ships and visiting the port of Long Beach, we complained then about congestion. We complained about the speed with which longshoremen discharged nearly twice as many ships that they had to deal with as they do now. We were frustrated with the internal processes and containers and the chassis that were hard to find.
Come to think of it, sailors really do complain an awful lot.
Fast forward three decades later and global trade has exploded along with America’s need to consume practically everything as quickly as we can from oversees. The knee-jerk reaction seems to be to point fingers at the longshoremen unions, Port Authorities and regulatory changes. I take a different view.
We can start with what a train wreck, stuffed in a dumpster fire 2020 was for global supply chains. Pour into that the back pressure of a resurgent economic demand of a recovering US and global economy and you get historic, unprecedented demand for ocean freight.
Let’s also keep in mind that a pause on air passenger traffic from overseas has artificially lowered air cargo capacity. Add in a delightful sprinkle of ocean carriers restricting capacity to take advantage of a returning market, and you get a quagmire of cosmic proportions.
Added to this is the desperate need for upgrades to infrastructure in our inbound ports and road/intermodal support system. Our ports, roads, bridges and rail are just a mess. For those of you who attended our latest Trade School session, you learned about the state of inbound infrastructure, the lack of overall support to repair it, and the lack of significant funding to make a dent in repairing it in the new White House two trillion-dollar infrastructure bill. There is nothing about passing laws to repair bridges and roads that generally gets a politician re-elected. Historically this has been a significant problem for allocating real money to address the underlying problem with congestion – the system the containers are being delivered into has been lacking for decades.
The need for US consumers to consume is insatiable. With the new acceptance post Covid that
e-commerce is a perfectly acceptable, if not preferred, way to throw money at our feelings in order to make our low self-esteem go away, we can, and will, shop 24 hours a day. This forces foreign factories to produce 24 hours a day, which they are happy to do. Where brutal problems begin, is when these ever-desired goods need to get to our shores.
There are only so many vessels, and only so many spaces on ships for so many containers. Once the vessel arrives at that safe water buoy in the US, only so many Harbor Pilots, only so many berths, only so many cranes, only so many spots on the yard, only so many chassis and so many drivers.
Add to this that regulations limit the number of hours they can operate, and the number of hours trucks can move in a day.
These containers on trucks are traveling on ever deteriorating roads and bridges, as well as rail systems in desperate need of upgrade, and eventually end up into a distribution system that is disjointed, devoid of any standards and ever-changing, and subject to constant tinkering by whatever new technology concept is the latest idea.
The goods pile up. They pile up in the warehouses. They pile up in traffic on the roads as they wait for a chance to drive past repairs. They pile up in slow moving rail that can’t whiz past as fast as the engine was built for because the rails can’t manage the weight and speed. They pile up in rest stops because of operator rest requirements from a lack of qualified drivers. They pile up in ports because equipment doesn’t return in a timely fashion. They pile up because the cranes aren’t available, and the berths can’t free up. Then the ships pile up in the harbor waiting to discharge and head back for more stuff to sell to you on whatever online service has recently convinced you that you can’t live without their marvelous doodad.
Man, I love this business.
The common reaction? “These carriers need to add more ships!” Or my personal favorite, “We need bigger and bigger ships! Dredge the waterways! Bigger cranes for bigger ships!” The reality is you can shove as much junk as you want into the casing when you are making sausage, but eventually it’s going to tear and you’re going to get an awful mess on your hands (literally). The only thing you can do when there is more stuff you’re trying to pack than your machine can handle all at once is: either go slowly or upgrade the machinery.
And nobody wants to deal with the financial reality or short-term inconvenience of upgrading the infrastructure to make this better. Not in a meaningful way. So, it all slows down.
So, we will probably be having this conversation again during the next global recovery. And there will absolutely be one after the next pandemic happens. That will probably be after I retire so I will get to have that conversation with you from my porch in the mountains of New Hampshire. Don’t worry, I won’t say “I told you so.” Nope. Instead, I’ll just pour you another tall glass of whatever we can still manage to drink, realize that we never seem to learn our lessons in this business and settle in for a good long afternoon with an old friend. Then I’ll tell those punk kids to get off my lawn before we get into my car to head to dinner at 4.30. I mean, we want to get home before Matlock, don’t we?