There have been delays once again in processing ships at the Ports of Los Angeles and Long Beach. One shipping expert told CNBC (June 9, 2023) that current vessel wait times are stressing the maritime supply chain in a way not seen since the Covid peak. The number of vessels due to dock at these two major ports is increasing as labor slowdowns on the West Coast have impacted supply chain operations, from trucks to rails and ocean carriers. Some docked vessels are now occupying space for as many as 9 days. Vessels have yet to be loaded/offloaded and sent away, which is critical to make room for the next wave of ships arriving.
At the Los Angeles area ports, the CGN Lyra has been at the dock since May 31; CGM Amerigo Vespucci has been there since June 1; YM Unicorn since May 31; and One Hangshou Bay since June 2. When ships go off schedule, the delays slide the arrival to additional ports, impacting their container deliveries, and ultimately contributing to container congestion, which was seen in the extreme during the Covid pandemic.
These developments come as shipping enters it peak inventory build season ahead of back-to-school and the holidays, a period which runs from July to October.
Inflationary spikes from new supply chain hiccups are a fear. Vessel delays, while up recently, are nowhere near the Covid port “parking lots.
Throughout the recent spike in labor tensions, some union workers have refused to show up for shifts, while others have been pulled off the job by port management. The Port of Seattle relieved union labor gangs working on vessels for the third day in a row due to “low productivity.” In maritime terms, a terminal can “fire” a labor gang for one shift if they perceive the work to be slow, and the workers can return the next day. The Port of Tacoma reports worker productivity at 50%, and my coauthor Chuck Munson tells me his new car has been caught up there. It was supposed to arrive several weeks ago.
Classroom discussion questions:
- What are the OM implications of a slowdown in West Coast ports?
- How bad was the port congestion during Covid? (Hint: see prior posts for details).
This processing delay at Ports of Los Angeles and Long Beach has the potential to induce cascading effect across the downstream supply chain. The labour productivity problem at ports can be partially resolved by introducing gig workers.