Biden Hasn’t Fixed The Port Crisis — Ships Are Just Being Counted Differently

O n Tuesday, Secretary of Labor Marty Walsh visited Southern California and held a press conference with port leadership and California politicians at the Port of Los Angeles.

They told a story of progress and cooperation in the ongoing supply-chain crisis. They emphasized that the ports on San Pedro Bay are some of the busiest in the world and have moved record amounts of cargo. Speakers made sure to give shout-outs to unions, especially the International Longshore and Warehouse Union (ILWU). They credited the Biden administration with making progress on port congestion and passing the infrastructure bill to invest more in ports.

It’s a nice story, and it made for some good photo ops, but it isn’t true. Port congestion is not improving.

Port authorities have simply changed the way they count the ships that are waiting. The Ports of Los Angeles and Long Beach adopted a new queuing system for waiting vessels in mid November. Port authorities said emissions from idling ships near the port were harming air quality, so they made a new system in which ships would line up farther away from the coast. That’s reasonable, but it also has another effect: putting waiting ships out of sight.

The San Pedro Bay port complex has a Safety and Air Quality Area (SAQA) that extends 150 miles west of the ports and 50 miles to the north and south. Port authorities began encouraging ships to line up outside that area.

They also began giving ships something called a Calculated Time of Arrival (CTA). The queuing system used to be first come, first served, with spots in line being assigned when ships got within 20 miles of the ports. Now, ships get a CTA when they leave their last port of call and begin their journey to Los Angeles or Long Beach.

The CTA acts sort of like a ticket at the deli. Once you get your deli ticket, you can shop the rest of the store and go up to the counter when they’re getting close to calling your number. Ships are now taking a similar approach. With a CTA in hand, it doesn’t really matter where the ship drops anchor. Many ships are going more slowly across the Pacific to save fuel and then dropping anchor just outside the SAQA. Others are waiting off the coast of Mexico or north of San Francisco. Others are hanging out on the Asian side of the Pacific and will steam over when their spot comes up.

So now instead of a pack of ships waiting close to the shore, there’s a more dispersed pack of ships waiting farther away from the shore. That’s not a success for American supply chains, but it allows port authorities to pat themselves on the back. Port of Los Angeles executive director Gene Seroka said on Tuesday that “the number of ships at anchor has decreased by more than 40 percent over a four-week period.” Port of Long Beach executive director Mario Cordero told CNBC on November 24 that “the vessels at anchor have been diminished” and “we’re having some progress in addressing the capacity constraints at the terminals.”

In a piece from yesterday, FreightWaves broke down the numbers to get the real story. If you count only the ships waiting within 40 miles of the ports, which was the standard measure, it is true that the number of waiting ships has declined by over 40 percent, as Seroka said. But more ships are now waiting outside that zone than inside it. As of Tuesday, FreightWaves said there were 44 ships waiting within the 40-mile zone and another 50 waiting farther away. That brings the total up to 94 ships waiting, which is more than the approximately 80 that were waiting when the new queuing system was started in mid November.

Actual shippers have not been fooled by the new counting system. DHL’s service announcements to its global network have consistently demonstrated for the past few months that the port situation at Los Angeles and Long Beach is not improving.

The more important measure of congestion for shipping customers is how long a trip across the Pacific will take. To a certain extent, businesses can plan around delays if they can at least be confident when something will arrive. New data from Flexport show that transpacific shipping times keep going up. In early to mid 2019, it took roughly 45 days for cargo to depart Asia, cross the Pacific, arrive at a U.S. port, and depart that port on some other mode of transportation. As of this week, that takes 105 days, and that’s a record high.

Of course, the U.S. is not in this alone, and Flexport notes that. The freight-forwarding company says that in the past two weeks, delays in Asia have increased, and the time that containers are stuck at American ports has decreased. But that doesn’t change the facts about record-high shipping times and more ships waiting in line in the ocean. That’s not what progress looks like, and it’s nothing to tout in a press conference.

Tuesday’s press-conference participants were all careful to praise the ILWU in their remarks, which shows how far away we are from really getting to the root of the problem. For decades before COVID, American ports had been falling behind global competitors. The ILWU’s opposition to automation is one of the key factors limiting American port productivity, which by extension limits the productivity of the entire economy. And it’s a contract year, with the current collective-bargaining agreement set to expire in July. The ILWU has rejected offers to extend negotiations to 2023, and its president has already told his members to “be prepared” because “there may be a battle in 2022.”

The ILWU is part of the problem, and its members are not interested in becoming part of the solution. (If you were making $190,000 per year plus $110,000 in benefits, you wouldn’t want anything to change, either.) Democrats are uninterested in acting against unions’ wishes. That’s why they wrote into the infrastructure law that money appropriated for port improvements can be used only for “human-operated equipment or human-maintained technology” — to protect union jobs at ports.

Our Southern California ports are some of the busiest in the world, and the American economy depends on them. The present crisis has laid bare how inefficient and uncompetitive they are. If the government wants to tell an actual story of progress, it needs to address the underlying causes of that inefficiency, not change the way waiting ships are counted while continuing to kowtow to organized labor.