Any relief that the ports of Los Angeles and Long Beach may get from a lull in import volumes during Chinese New Year will be offset by labor shortages on the docks and local warehouses due to Omicron breakouts, port leaders warn.
Not helping matters is the expectation that the slowdown in shipping during the approximately two weeks of celebrations that began Tuesday will be less apparent this year, container lines and analysts tell JOC.com. The Chinese government has pressured factories to keep workers from traveling back to their hometowns for the holiday due to COVID-19 concerns, and retail ordering is still strong.
“March will look a little different this year. We won’t see a sharp decline in imports,” Gene Seroka, executive director of the Port of Los Angeles, told JOC.com. Seroka expects retailers to shift immediately to inventory replenishment as they order merchandise on a “just-in-case” rather than “just-in-time” basis.
Employers at the marine terminals and in the more than 1.8 billion square feet of industrial and warehouse space in Southern California continue to struggle attracting sufficient labor each day, due primarily to the Omicron variant.
Jim McKenna, president of the Pacific Maritime Association, which manages the West Coast labor contract with the International Longshore and Warehouse Union (ILWU), told JOC.com that more than 1,800 longshore workers on the West Coast tested positive for COVID in the first three weeks of January. That was more than the 1,624 cases for all of 2021.
Although the cases appear to have peaked last week and are starting to decline, the impact on skilled longshore workers who drive container-moving equipment in the yards has an outsized impact on labor availability because full gangs cannot be dispatched if there is a shortage of equipment operators.
“Labor availability is based on skilled operators. You can take out seven, 10, 12 guys [in a gang] if there aren’t enough skilled operators,” McKenna said.
ILWU Coast Committeeman Frank Ponce De Leon said the impact of COVID on the availability of skilled equipment operators highlights the ongoing need to train more dockworkers to operate the yard equipment.
“Training additional labor is the responsibility of the employer,” Ponce De Leon told JOC.com in a statement.
Labor crunch at warehouses
Warehouses in Southern California and in many locations around the country face labor shortages due to COVID even though wages are escalating rapidly.
As a result of the labor shortage, warehouses are filled to capacity with cargo that has entered the ports in the pre-Lunar New Year rush, said Scott Weiss, vice president of business development at third-party logistics provider Whiplash. “Everyone’s inventory is exceeding their footprint,” he said.
Under those conditions, warehouse operators are forced to store inbound laden containers on chassis in their yards, which is contributing to the chassis shortage in Southern California, Weiss added.
The average “street dwell time” of chassis in Southern California is 8.8 days this week, according to the Pool of Pools website, which is published by the three major intermodal equipment providers (IEPs) in Southern California. While that is an improvement from the 11-day average dwell times in early January, it is still more than double the pre-pandemic average of four-day dwells, said Ron Joseph, executive vice president and COO at the IEP Direct ChassisLink.
“Street dwell has been about 8.8 to 9.2 days almost all of the past year,” Joseph said.
The IEPs are addressing the chassis shortage by repairing out-of-service equipment. “We’re still working every weekend to repair chassis,” Joseph said. Out-of-service chassis now account for less than 3 percent of the fleet in Southern California, which IEPs consider desirable.
Truck turn times move steadily higher
The compounded effect of labor shortages, chassis shortages, excess empty containers on the docks, and the sheer volume of imports is causing congestion at the ports to increase, which is reflected in longer truck turn times, said Matt Schrap, CEO of the Harbor Trucking Association (HTA).
“The terminals are so clogged it’s difficult to maneuver,” Schrap said.
According to the HTA data, the average truck turn time in Los Angeles-Long Beach has increased from 78 minutes in July to 92 minutes in January. The last time the turn times exceeded 90 minutes was in December 2020.
Schrap said while the ports have been cooperating with Biden administration port envoy John Porcari to expand gate hours, with the eventual goal of working 24/7, truckers would prefer that the terminals concentrate on running gates that open much earlier, even as early as 4 a.m. when traffic conditions are more favorable in the early hours.
Container ship backlog
All the while, the number of container ships headed toward Los Angeles-Long Beach is climbing as factories this past week completed their final shipments before closing for the start of the Lunar New Year holidays.
According to the Marine Exchange of Southern California, 101 container ships were proceeding toward Southern California Tuesday, six more than Monday. That includes seven container ships at anchor or loitering within 25 miles of the coast, and 94 either slow-steaming from Asia or loitering outside of the 25-mile Safety and Air Quality Area (SAQA). There were 26 container ships at berth.