On October 13, the New York Times reported, “President Biden announced Wednesday that the Port of Los Angeles will operate around the clock and major companies including Walmart, UPS and FedEx would expand their working hours as his administration struggles to relieve growing backlogs in the global supply chains that deliver critical goods to the United States.”
The port is a node in a system with physical constraints, Mr. President, with issues like labor availability, berth capacity, leading to through put limitations.
On October 26, CNBC reported, “The Biden administration is hopeful new fines imposed on carriers at the nation’s busiest port complex will abate the intensifying logjam of cargo ships. The twin ports of Los Angeles and Long Beach announced Monday that containers moved by trucks will have nine days before fines start accruing and containers scheduled to move by rail will have three days.”
This is a carrier and driver shortage, Mr. President, not resistance.
In their cover story, “Instant Economics,” published on October 23, The Economist asks, “Does anybody understand what is going on in the world economy?” According to The Economist, there still are “fleets of container ships waiting outside Californian and Chinese ports.” By focusing on a node – the Port of Los Angeles and Long Beach – rather than the collective constraints interacting across the physical network, the President and the federal government have proven that they don’t get it.
On October 29, U.S. Today fact checked descriptions of the bottleneck in California ports. They found, “108 container ships were waiting to dock at the Los Angeles and Long Beach ports, according to an Oct. 21 anchorage report by the Marine Exchange of Southern California. Of those, 79 were at anchor or in holding areas, and 29 were at berth.”
Port congestion is not getting any better, because it is a network flow dislocation, not the port capacity problem. Resolution of the network problem – not just in California, but around the country – is a balance of trade problem. In March of 2020 according to the Census Bureau, just before the pandemic rearranged world trade for us, our trade deficit was $19.8 billion. In August 0f 2021, as reported by the Census Bureau, our trade we imported just under $43 billion.
We have more than doubled out trade deficit with China in a little over a year. More full containers are coming our way, which means that there is a growing backlog at the ports. Empty containers return to China, creating logjams on the other end. This post-pandemic trade imbalance exists around the global chain, not just ports in California and the United States.
Please stay out of real world logistics,, Mr. President. We weren't impressed with the U.S. exit from Afghanistan. We haven't seen much leadership coming out of Washington in the global trade wars. Let the professionals and the markets sort out the flows.
