Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. Tracy, I think
Speaker 1: we're actually getting to the point where we've covered a
Speaker 1: lot of the supply chain by now. No, that's impossible. Okay,
Speaker 1: there's always more. There's definitely always more, but I feel like,
Speaker 1: you know, the big things we're starting to. Like, you know,
Speaker 1: if you were to have some manufactured good for that
Speaker 1: was manufactured in China and consumed in the US, you
Speaker 1: would know a lot about it by now if you
Speaker 1: listen to all. We've certainly provided a public service in
Speaker 1: supply chain education, that's true. So yeah, okay, So we've
Speaker 1: talked about ships and the containers at least at least
Speaker 1: three times, I think actually to on Freight one, on
Speaker 1: dry Ball more, talked about trucking who recently did a
Speaker 1: where House episode, although unfortunately you have to miss that one.
Speaker 1: But of course, you know, Okay, there's the ports, and
Speaker 1: we've talked about congestion at the ports, but we really
Speaker 1: haven't dived deep into what's going on there. Yeah. Well,
Speaker 1: we've sort of talked about the ports from the perspective
Speaker 1: of the shipping industry, and there's a bit of Um,
Speaker 1: I guess there's sort of blame being laid on both
Speaker 1: sides for the transportation gridlock. Right, So a lot of
Speaker 1: the container shipping companies will say, well, yes, there's a
Speaker 1: shortage of containers and there are some issues in shipping,
Speaker 1: but the ports aren't handling stuff well or they haven't
Speaker 1: made enough infrastructure investment, and so there's a lot of
Speaker 1: gridlock on that side. And um, so you're sort of
Speaker 1: getting two different well two different versions of what's going on. Yeah,
Speaker 1: exactly right, Like, we know that there's numerous ships that
Speaker 1: are waiting to be unloaded. We know some at the ports,
Speaker 1: and people have pointed this out several times, that there
Speaker 1: are several days, or that there are ships that are
Speaker 1: waiting there for their turn to get outloaded. We know
Speaker 1: all kinds of things are going on. It is a
Speaker 1: source of bottleneck as far as I know, and we're
Speaker 1: going to learn more about it shortly. It has yet
Speaker 1: to ease, really, but I think it's time we really
Speaker 1: figured out, like what is happening when the ship gets
Speaker 1: to the port, when it needs to get have the
Speaker 1: containers unloaded, put onto trucks and so forth. And it really,
Speaker 1: uh really drilled down into that specific points along the
Speaker 1: supply Jamt. Yeah, absolutely, so it's going to be a
Speaker 1: really interesting discussion. My only knowledge about ports comes from
Speaker 1: that one season of The Wire, so I'm quite keen
Speaker 1: to to learn more about how they work and what's
Speaker 1: going on right now. Exactly right, Well, I we have
Speaker 1: the best possible guests for this episode. We're gonna be
Speaker 1: speaking to Jeans Troka. He is the executive director at
Speaker 1: the Port of Loss Angeles. He's been in that role
Speaker 1: for a little bit over seven years. Gene, thank you
Speaker 1: so much for joining us. Thanks Joe and Tracy, pleasure
Speaker 1: to be here today. Why don't you just start us
Speaker 1: off big picture. We know that there is a lot
Speaker 1: of congestion at the ports. How bad is it right now?
Speaker 1: What are the numbers like versus ah, you know, versus
Speaker 1: historical comparisons, and what are the prospects for things? Easy
Speaker 1: and give us that give us the state of the
Speaker 1: Port of Los Angeles right now. Yeah, Joe. The story
Speaker 1: really goes back over three years ago to the introduction
Speaker 1: of trade tariffs and a pretty unique take on the
Speaker 1: trade policy by the previous administration of Washington created a
Speaker 1: lot of choppiness in the industry. Folks were importing big
Speaker 1: numbers to get inside of tariff milestone dates and taxes
Speaker 1: that American companies were paying on those imported goods. Similarly,
Speaker 1: and at the same time, we started to see retaliator
Speaker 1: terrorists put in place uh specifically by China, which have
Speaker 1: impacted our farmers, manufacturers, and our automotive sector broadly. Flash
Speaker 1: forward to the end of two thousand nineteen. We went
Speaker 1: off a cliff because of those trade policies that were
Speaker 1: in place. Our business dropped by about sixteen percent, and
Speaker 1: most folks were looking for a pretty mundane year. As
Speaker 1: we got into that area of around Lunar New Year
Speaker 1: in January, the bottom really fell out completely. With the
Speaker 1: advent of the COVID nineteen virus. The Chinese economy shutdown.
Speaker 1: Manufacturing sector was shuttered, and then soon thereafter we went
Speaker 1: into safer at home orders and our volume dropped another
Speaker 1: nineteen percent up through May. Then suddenly the American consumer
Speaker 1: found that they could buy a lot more online, they
Speaker 1: could make a family out into a big box retailer
Speaker 1: or home improvement store, and our retail goods started going
Speaker 1: through the roof and since then, we've averaged about nine
Speaker 1: thousand container units a month every month that used to
Speaker 1: be a good single month in our traditional peak season.
Speaker 1: So where we stand today is that birth productivity our
Speaker 1: vessels compared to pre COVID times. We're welcoming in about
Speaker 1: fifteen vessels a day compared to ten before COVID and
Speaker 1: this buying surge started. But all parts of the supply
Speaker 1: chain have been kind of stacked up. The warehouses are full,
Speaker 1: and and remember we've got about two billion square feet
Speaker 1: of warehousing from the shores of the Pacific out to
Speaker 1: the Mojave Desert here in southern California, they're overflowing. If
Speaker 1: those warehouses are overflowing, about a third of our cargo
Speaker 1: goes to them directly. So those containers sit as warehouses
Speaker 1: on wheels. Our marine terminals, of which we operate today
Speaker 1: seven for container business out of the twenty seven here
Speaker 1: at the nation's largest port in Los Angeles, those terminals
Speaker 1: are operating at about of land usage physical design full
Speaker 1: capacity is eighty percent utilization, right, So the next ship
Speaker 1: that comes in can only unload so much cargo because
Speaker 1: there's no room to put it. The ship after that
Speaker 1: winds up sitting outside our breakwater at anchor, and today
Speaker 1: we've got twenty six container vessels at anchor outside that breakwater,
Speaker 1: destined for both the ports of Long Beach and Los Angeles,
Speaker 1: the twin ports of San Pedro Bay. The average stay
Speaker 1: out there is five days. It's about half of what
Speaker 1: it was at its worst point back in February. But
Speaker 1: compared to what we normally like to see zero ships
Speaker 1: at anchor, high levels of fluidity of cargo, this pandemic
Speaker 1: induced buying surge is something the likes of which we've
Speaker 1: never seen before. So let me ask you the obvious
Speaker 1: question based off of that, but what, in your opinion,
Speaker 1: is driving um some of the grid law that we've
Speaker 1: seen people can complain about. So we have, you know,
Speaker 1: lots of ships anchored um off the port waiting for
Speaker 1: a birth, although as you said, it's not as bad
Speaker 1: as it once was, but plenty of people out there
Speaker 1: are talking about rising shipping costs, um, longer waiting times,
Speaker 1: shortages of various goods. What's contributing to the gridlock. Is
Speaker 1: it just the surge in activity that you described. Yeah,
Speaker 1: primarily and as I stated, the choppiness of imports, the
Speaker 1: paucity of exports, the lack of a balance of trade,
Speaker 1: which has been exacerbated by these ill advised trade policies,
Speaker 1: have really moved us out of kilter and tracy. What
Speaker 1: you've seen is, basically, and I think Dan Maffei, the
Speaker 1: Chairman of the Federal Maritime Commission, put it best, it's
Speaker 1: like putting ten lanes of traffic into five. We've been
Speaker 1: breaking records every month. We surpassed one million container units
Speaker 1: in a month. It was a first for any port
Speaker 1: in the Western Hemisphere. We surpassed ten million container units
Speaker 1: in a fiscal year, first time ever in the Western Hemisphere.
Speaker 1: So we're pushing through a lot of cargo. We just
Speaker 1: have much more coming at us than ever before. And
Speaker 1: when these nodes of the transportation system start getting clogged up,
Speaker 1: they back up all the way to the waterfront. So, Gene,
Speaker 1: you mentioned just then this idea of trade being out
Speaker 1: of balance, and this is something we've heard consistently from
Speaker 1: our guests, this idea that you have a one way
Speaker 1: flow of trade from China to the US, which means
Speaker 1: you have all these full containers going to America, and
Speaker 1: then you have an issue of the containers actually getting
Speaker 1: back to Asia so that they can complete the round
Speaker 1: trip and be sent again. And I think Ryan Peterson
Speaker 1: from Flex Sports gave us a stat that before the
Speaker 1: pandemic something like sixty of containers leaving the US were empty,
Speaker 1: and it since jumped to something like can you of
Speaker 1: some color around that issue? Why is that a problem
Speaker 1: and how many empty containers are you seeing as a
Speaker 1: proportion right now? Well, start off with with the major
Speaker 1: solve for in the industry is that most of our
Speaker 1: imports go to metropolitan areas and many of our exports
Speaker 1: emanate from rural America. So as an example, we bring
Speaker 1: in a ton of product into Chicago and then we
Speaker 1: still as an industry have to cater to the American
Speaker 1: farmer in the Red River Valley in North Dakota. So
Speaker 1: how do you get that empty container chassis rail service
Speaker 1: and align it with ship service from Chicago up to
Speaker 1: some place outside of Fargo where a farmer wants to
Speaker 1: load a bunch of containers. That's number one difficulty. Number
Speaker 1: two is that with all these imports coming in now,
Speaker 1: there has been a look by the liner shipping companies
Speaker 1: that they need to get empties evacuated back to the
Speaker 1: manufact acturing location of preposition those containers to catch the
Speaker 1: next round of lucrative imports faster than ever. So there's
Speaker 1: been a commercial decision made. And then thirdly, the strength
Speaker 1: of the US dollar is also continuing to impact us.
Speaker 1: And while it's so important and so good for our
Speaker 1: economy in many many ways, it's not good from a
Speaker 1: competitiveness standpoint, because we're going up against other trading nations
Speaker 1: that have better exchange rates and are beaten us to
Speaker 1: the punch. So we we know Ryan likes to comment
Speaker 1: on a lot of things in the industry. I can
Speaker 1: tell you what goes on here and through the nation's
Speaker 1: largest gateway. We're right now sending back about three hundred
Speaker 1: thousand empty container units per month to every one hundred
Speaker 1: thousand export units. We're about five to one imports to exports,
Speaker 1: and in more normal times, Tracy, that's about two and
Speaker 1: a half imports to everyone export. You know, let me
Speaker 1: uh back up for a moment, and something I realized,
Speaker 1: I don't know what the corporate structure of the Port
Speaker 1: of Los Angeles. I mean, we think of it as
Speaker 1: like the sort of important public infrastructure, but what is
Speaker 1: uh is it owned? Is it private? Is it for private?
Speaker 1: What's the nature of it? Joe. The Port of Los
Speaker 1: Angeles is a municipal agency of the city. I report
Speaker 1: to Los Angeles Mayor Eric Garcetti directly. He is appointed
Speaker 1: a five member Harbor Commission that works with me on
Speaker 1: all policy issues and helps drive business. We are not
Speaker 1: for We are a nonprofit agency where all moneys and
Speaker 1: revenue sources from our customers coming in are reinvested in
Speaker 1: our ports, infrastructure, our community, with respect to public access
Speaker 1: and our environmental strategy. We hold these dred acres of
Speaker 1: property and trust for the people of California based on
Speaker 1: the state's Tiglands trust regulation that was an unattended consequence
Speaker 1: of the state joining the Union. Can you talk about
Speaker 1: when when a ship actually comes to a port um
Speaker 1: like yours, what are the economics or the process of
Speaker 1: unloading um and loading the ships like? How does that work?
Speaker 1: And how do you decide who to prioritize? Probably two
Speaker 1: questions there, one being operations into being economics. One, as
Speaker 1: a landlord port defined by the U. S. Army Corps
Speaker 1: of Engineers, we manage the property and we lease it
Speaker 1: out to private sector companies who manage the transportation business.
Speaker 1: So those would be primarily marine terminal operators who welcome
Speaker 1: in the liner shipping companies to work their vessels and
Speaker 1: move cargo throughout the nation's four hundred thirty five congressional
Speaker 1: districts with product moving in and out of Los Angeles.
Speaker 1: So the private sector companies are responsible for designing schedules,
Speaker 1: vessel berthing windows, priority lists, and how they physically want
Speaker 1: to move cargo in and out, while working very closely
Speaker 1: with the International launshore or Warehouse Union for the dock workers,
Speaker 1: truck driver's warehouse operators, etcetera. From the financial perspective, we
Speaker 1: lease out property to these private sector companies and we
Speaker 1: make our money by every container that has moved over
Speaker 1: these docks, and that revenue stream then, as I mentioned,
Speaker 1: goes back into three major segments of port infrastructure, both
Speaker 1: physical as well as digital, our community efforts on public access, retail, dining, entertainment,
Speaker 1: public infrastructure, and then thirdly, the environmental strategy that has
Speaker 1: been in place now for the better part of seventeen years,
Speaker 1: which has witnessed a reduction in diesel particulate matter by
Speaker 1: nine percent over that time. What is uh the market
Speaker 1: share When we think about the biggest ports entering the US.
Speaker 1: And I know there's you mentioned the Port of Long
Speaker 1: Beach is another big one. Can you give us this
Speaker 1: sort of distribution of major sort of entryway for imports?
Speaker 1: How much share does the Port of Los Angeles have?
Speaker 1: And I guess does this sort of I don't know.
Speaker 1: I guess it's a two part question. You know, we
Speaker 1: think about, Okay, the ports are jammed, and we obviously
Speaker 1: have this issue. Is this an area that would be
Speaker 1: right for potential further public investment? You know, there's this
Speaker 1: big infrastructure bill that they're debating in d C. Is
Speaker 1: there an opportunity to expand our import capacity so that
Speaker 1: we don't have these issues in the future. Sure, both
Speaker 1: are good questions, broad picture on the on the market
Speaker 1: share percentages. Many while both ports Long Beach and Los
Speaker 1: Angeles are municipal agencies of the respective cities, most in
Speaker 1: the industry observers, users of the port, customers and transport
Speaker 1: service companies all see this as one port complex. And
Speaker 1: this complex represents forty per cent of our nation's imports
Speaker 1: and about thirty percent of our nation's exports. Now, the
Speaker 1: interesting take here, Joe and Tracy is that before two
Speaker 1: thousands two, we had fift the nation's imports. We've lost
Speaker 1: about our market share as many importers have gone to
Speaker 1: four corners and poor diversification strategies due to what they
Speaker 1: saw as difficulties or trying to de risk their supply chains.
Speaker 1: Over time, that was also met with increasing investment on
Speaker 1: the Eastern Gulf Coast, also on the Pacific coast of
Speaker 1: Mexico as well as British Columbia, so importers now had
Speaker 1: more choice than they ever had before. And then just
Speaker 1: several years back, the opening of the third lock of
Speaker 1: the Panama Canal gave further scale to those who wanted
Speaker 1: to utilize other ports of entry and exit in the
Speaker 1: United States. Back to the market share position Los Angeles
Speaker 1: right now, is it about of all container cargo traffic
Speaker 1: moving in and out of the United States. So a
Speaker 1: healthy number one position in that segment that we've held
Speaker 1: now for one consecutive years. So again matched up with
Speaker 1: the fact that the car going passengers traversing this port
Speaker 1: reach each and every one of our nation's four hundred
Speaker 1: and thirty five congressional districts. I would say all those
Speaker 1: numbers combined mean that this is a conversation of national
Speaker 1: economic significance. We also employ as part of this port complex,
Speaker 1: one in nine jobs in the five county Southern California region.
Speaker 1: That means about a million paychecks every week go to
Speaker 1: people who have jobs related to this port. Whether it's
Speaker 1: the large manufacturing community in Los Angeles County, are dock workers, truckers,
Speaker 1: and the warehouse personnel that I mentioned to other logistitions
Speaker 1: and business folks around this supply chain. So it's a
Speaker 1: very important part of our economy, and when there are
Speaker 1: problems here, it is felt across a wide swath of
Speaker 1: the working population. On the notion of infrastructure, there's a
Speaker 1: lot to like about the American Jobs Plan, and we've
Speaker 1: been following very closely talking to administration officials back in
Speaker 1: Washington about bipartisan negotiations that continue to this very hour
Speaker 1: on how we are going to push out money to
Speaker 1: all these important areas, including right now at its latest rendition,
Speaker 1: about sixteen billion US dollars related to ports and inland
Speaker 1: waterways throughout the country. But there is one area that
Speaker 1: that makes me pause is that over the past ten years,
Speaker 1: the federal government has out invested the West Coast ten
Speaker 1: to one by putting about eleven billion US dollars into
Speaker 1: ports on the eastern Gulf Coast versus about one point
Speaker 1: two billion US here on the West coast. That's got
Speaker 1: to change. And what we've asked the Biden administration and
Speaker 1: the officials are to look at investments that will have
Speaker 1: the greatest economic good for the country. And that leads
Speaker 1: you to one place, Los Angeles. Just on the topic
Speaker 1: of market share, and I guess competition with other ports,
Speaker 1: I'm afraid this is probably also going to be a
Speaker 1: two part question, But one have you lost market share
Speaker 1: to other ports, specifically because of the congestion issue? And
Speaker 1: then to what can you do to ease congestion or
Speaker 1: what have you been doing good questions? Um One, the
Speaker 1: numbers here have been going up since last year. No,
Speaker 1: we've not lost any market share to other ports. But
Speaker 1: most of the industry observers Tracy who look at this
Speaker 1: information lagged by about six to eight weeks, So you're
Speaker 1: not going to see anything just this moment. But in
Speaker 1: watching our numbers again, averaging nine thousand container units a month,
Speaker 1: crossing a million in May, very unlikely that will lose
Speaker 1: market share in this snapshot in time, what can we
Speaker 1: do to ease congestion. We've been working on that around
Speaker 1: the clock with our business partners, with government officials. Merry
Speaker 1: gar Citi and I were just on a nationwide conference
Speaker 1: call with a Secretary Pete Boudhigage of the Department of Transportation,
Speaker 1: with representatives from Agriculture, the FMC, and Maritime Administration, plus
Speaker 1: many others. We've outlined what we're doing right now, and
Speaker 1: number one, we believe that digitization is going to carry
Speaker 1: us through this. Think of a place, this complex, with
Speaker 1: this myriad of customers, about two hundred thousand importers and exporters,
Speaker 1: no one of which has more than a five percent
Speaker 1: market share, eighteen thousand truckers, twelve marine terminals, twenty vessel operators,
Speaker 1: and a look at railroad systems that are unlike anywhere
Speaker 1: else in the world where we have about a hundred
Speaker 1: trains per day no less than three miles in length
Speaker 1: moving in and out of the port complex. Working with
Speaker 1: all these private sector companies, everybody works in their own silo.
Speaker 1: So what we've tried to do is create our nation's
Speaker 1: first and still only port community system co created with
Speaker 1: web Tech called the Port Optimizer and it's meant to
Speaker 1: be a system of systems to aggregate data so folks
Speaker 1: don't have to hunt and peck around dozens and dozens
Speaker 1: of websites. And with our partnership through United States Customs
Speaker 1: and Border Protection, we received data some forty days before
Speaker 1: a vessel comes into Los Angeles, so our partners through
Speaker 1: this information sharing concept can see what's coming in plan
Speaker 1: their staffing and asset positioning better than anyone else. And
Speaker 1: with that, I think we've gotten a leg up where
Speaker 1: vessel productivity is up. We're moving more cargo in and
Speaker 1: out of this port than we ever have before, but
Speaker 1: there are still adjustments we have to make. More people
Speaker 1: need to join our digitization project, and that's gonna be
Speaker 1: a must if we're gonna have everyone filtering out through
Speaker 1: this information flow to make sure they're prepared better than
Speaker 1: they are today. Second, we've put numerous incentives in place
Speaker 1: to reduce trucker weight times, the time they spend at
Speaker 1: the port, and how quickly they can move out. In addition,
Speaker 1: we've encouraged our truck community to move containers in and
Speaker 1: out at the same time, bring an import out of
Speaker 1: the port while dropping off that export at the same
Speaker 1: time so as not to wait that precious gate time.
Speaker 1: We also, through our digitization program, have a look at
Speaker 1: a port wide reservation system that will show us exactly
Speaker 1: where we have opportunities to expand service. For example, right now,
Speaker 1: on our night shifts that go from six pm to
Speaker 1: three am, thirty per cent of our truck reservation system
Speaker 1: go unused. So we've got to drive truckers to that
Speaker 1: particular open reservation to avoid their way times during the
Speaker 1: day and maximize their productivity. Containers are sitting because truckers
Speaker 1: are not showing up and for a myriad of reasons,
Speaker 1: not just that individual driver or the trucking company. We've
Speaker 1: got to get the information so precise that these folks
Speaker 1: know how to act on a dime to get in
Speaker 1: an out of this port and trust that they will
Speaker 1: be serviced when they come in. In addition to all that,
Speaker 1: we've given the Secretary of five point plan that also
Speaker 1: includes investment and information but also trade policy and working
Speaker 1: on the digitization aspects. So these discussions are taking place
Speaker 1: ongoing with our partners here on the ground locally in
Speaker 1: southern California, as well as the highest levels in today's government.
Speaker 1: So just on the subject of technology and digitization, So
Speaker 1: this is something that I was wondering. But you know,
Speaker 1: we talked about containers as a revolutionary technology. The ability
Speaker 1: to standardize shipments really contributed to the globalization and trade
Speaker 1: that we've seen um in recent decades. But on the
Speaker 1: other hand, containers now are you know, a technology that
Speaker 1: was invented in the sixties or seventies, and I don't
Speaker 1: think we've had a significant update to that tech in
Speaker 1: the time since. So I'm just wondering, is there something
Speaker 1: more fundamental that it be changed about containers or where
Speaker 1: is the next area of potential innovation? A couple of fronts,
Speaker 1: I think on the digitization spot, folks want to know
Speaker 1: where their their shipments are at what time, so they
Speaker 1: can not only trace them compared to a proform a schedule,
Speaker 1: but also in act what we call exception management. So
Speaker 1: if something's going against a schedule or not uh in
Speaker 1: line with the rival dates UH, the importer of record
Speaker 1: can act on that and take decisive steps to move
Speaker 1: the cargo along a little bit quicker. But the interesting
Speaker 1: thing about the container is that it naturally sits for
Speaker 1: some time. It's not like us moving on and off
Speaker 1: airplanes or driving on freeways and tollways. A container loads
Speaker 1: on a ship in Asia and it will sit in
Speaker 1: that same position for anywhere from fifteen to thirty days
Speaker 1: before it reaches its shore of discharge. Once it reaches there,
Speaker 1: there'll be a spot for it specifically to move, and
Speaker 1: then it'll move on a training as our gateway being
Speaker 1: the example, and that will take another five to seven
Speaker 1: days to get to destination. So you're not seeing these
Speaker 1: incremental moves that specific areas of time. What you do
Speaker 1: see is the points of rest, and that's been a
Speaker 1: problem for us here in Los Angeles, for example, we've
Speaker 1: got ships at anchor because all those other nodes are
Speaker 1: backed up as I mentioned to you, But once a
Speaker 1: container gets on the ground at our marine terminal here
Speaker 1: in Los Angeles, it's sitting for an average of five days.
Speaker 1: Pre COVID or presearch it sat for two to two
Speaker 1: and a half days. So the velocity has been slowed down,
Speaker 1: and there's so much cargo coming in folks don't have
Speaker 1: a place to put it. Once it leaves our port
Speaker 1: facility by truck, it's sitting in average of about eight
Speaker 1: to nine days now, which is nearly three times what
Speaker 1: it was pre search, and that adds a tremendous amount
Speaker 1: of cycle time. So when folks start talking about a
Speaker 1: limited supply of containers, it's because they're sitting longer than
Speaker 1: they're normally planned to do so. And here in southern California,
Speaker 1: underneath that container our trailer wheels or chassis as we
Speaker 1: call them in the industry. If those are dislocated for
Speaker 1: nine days out on the street with a container, the
Speaker 1: next round of imports have a difficult time matching up
Speaker 1: those trailer wheels to get the box out of the
Speaker 1: port property. The third piece on what we call these
Speaker 1: dwell times is related to the rail system, and with
Speaker 1: a paucity of exports, as we've described so far, this
Speaker 1: one way trade is hitting our western railroads successively each
Speaker 1: and every day. There used to be a time when
Speaker 1: we had ten ships coming into port every day that
Speaker 1: you'd have a day or two to kind of clean
Speaker 1: up the terminal yard, get your rail cars managed, put
Speaker 1: them in place with the engine power and the crewing.
Speaker 1: Now it's an all out departure from Los Angeles to
Speaker 1: the interior of the country, and at the same time,
Speaker 1: the cargo is sitting longer at those interior points. For example,
Speaker 1: the Union Pacific Railroad recently slowed down cargo to Chicago
Speaker 1: because they had twenty five miles of trains sitting outside
Speaker 1: of Global for Joliet, where cargo owners were not picking
Speaker 1: up that inbound product the way they had used to.
Speaker 1: So it slows down the whole system. And now you
Speaker 1: see it from Chicago to Los Angeles back to the
Speaker 1: water into Asia. I wanna do let dive deeper into
Speaker 1: some of these congestions, but I'm curious, like one factor
Speaker 1: that um kinda sort of different. There are a lot
Speaker 1: of fires this year, a lot of heat this year.
Speaker 1: People talk about the role of a contribution of climate
Speaker 1: change or climate disasters to some of these shipping tensions.
Speaker 1: How do you see that from your perspective? How is
Speaker 1: that adding to some of the adding to the difficulties
Speaker 1: this year? We could we could do another show Joe
Speaker 1: on climate change alone. But what I will tell you
Speaker 1: is this that many more folks in our industry, at
Speaker 1: the highest levels down the family businesses, are very concerned
Speaker 1: about that and what they can do to make this
Speaker 1: a better place. Second, when it comes to the wildfires
Speaker 1: in California and the drought. We've seen a couple of
Speaker 1: things happen. Number One, it will impact rail and truck
Speaker 1: service if we can't get over the Cahoon Pass, where
Speaker 1: we can't go out the ten Freeway to the inland
Speaker 1: Empire where the majority of these warehouses are located. The
Speaker 1: other piece that many people don't see here outside of
Speaker 1: California is that when we get to these extreme heat waves,
Speaker 1: the governor and the Public Utilities Commission has been shutting
Speaker 1: down power, and that power gets shut down at ports,
Speaker 1: and it stops the use of our cranes that lift
Speaker 1: the containers on and off the vessels. It also stops
Speaker 1: the use of all our alternative marine power, which was
Speaker 1: designed to plug in a ship to the electrical grid
Speaker 1: and turn off all but the auxiliary engines, saving thousands
Speaker 1: of tons of diesel emissions with every port call. So
Speaker 1: the impacts here are pretty wide and far with or
Speaker 1: it be transportation environment or a combination of both. Since
Speaker 1: we're talking about UM factors that are sort of compounding
Speaker 1: the congestion issue, I wanted to touch on something that
Speaker 1: you already brought up UM, which is the trucking industry,
Speaker 1: and I guess more generally labor market tightness. So we've
Speaker 1: heard a lot of discussion about this idea of a
Speaker 1: trucker shortage UM affecting the transportation industry. We've actually done
Speaker 1: an episode on it before. You're in an excellent position
Speaker 1: to see that issue UM if it exists. So I
Speaker 1: guess my question is how worried are you about an
Speaker 1: alleged trucker shortage and how is it impacting your business? Well,
Speaker 1: this is one of the areas that we focus on
Speaker 1: a lot, and whether it's equity for drivers, the ability
Speaker 1: to get them affordable, cleaner trucks to operate, or the
Speaker 1: amount of time they spend here at the ports simply waiting,
Speaker 1: taking away from their eleven hours of daily regulated service
Speaker 1: by the federal government. So all of that comes into play.
Speaker 1: And then from around numbers perspective, the average age of
Speaker 1: a trucker in the country is about fifty seven and
Speaker 1: they have a attrition rate per year. So this is
Speaker 1: an area that we really want to boost up and
Speaker 1: we're working very closely with a number of trucking associations
Speaker 1: as well as the private sector itself to try to
Speaker 1: make this a career. And we can make it a
Speaker 1: career if these folks have good working conditions, affordable machinery
Speaker 1: to run their craft, and thirdly, the ability to make
Speaker 1: multiple turns here in the port drayage business, these folks
Speaker 1: mainly work on a per run revenue rate, so for
Speaker 1: every container they haul they earn, they earn money. For
Speaker 1: every moment they sit they don't, So getting them greater
Speaker 1: turns here at the port is important. And in good times,
Speaker 1: we're getting a trucker on average three three and a half,
Speaker 1: maybe even four turns per day before they're our is
Speaker 1: of service run out in a healthy and safe environment. Today,
Speaker 1: i'd say that number is a lot closer to two
Speaker 1: turns a day, and that doesn't help them make a
Speaker 1: lot of money. So you have not only the head
Speaker 1: winds that you face nationwide with those numbers I just shared,
Speaker 1: but also an artificial shortage because it takes longer to
Speaker 1: get in and out of the ports, and we've got
Speaker 1: to we've got to straighten that out, and that's why
Speaker 1: we've put it incentives the digitization product to open up
Speaker 1: these and illustrate these appointment times so folks can really
Speaker 1: tap into them as quickly as possible, and real time
Speaker 1: information to show around this massive court court complex where
Speaker 1: I can get in quickst during the day, and how
Speaker 1: I can make decisions because previous to this hunting and
Speaker 1: pecking through those websites, by the time you figured out
Speaker 1: what was going on on the ground of the port,
Speaker 1: it was time to dispatch for tomorrow. What about port
Speaker 1: workers more widely? Are are they harder to hire in
Speaker 1: the current environment? You've got different segments of folks and
Speaker 1: and are our doc workers under the International Longshore and
Speaker 1: Warehouse Union are about fifteen thousand members strong here in
Speaker 1: Southern California alone. Uh, they have about eight thousand registered
Speaker 1: members meeting strong career folks with skilled practitioner certification. And
Speaker 1: then you've got about seven thousand apprentices or what we
Speaker 1: call casuals that are trying to build their skills, hours
Speaker 1: and certification to become full time employees. Those folks have
Speaker 1: been extremely strong during this surge. In fact, I'm told
Speaker 1: now by the Employers Association that the average rank and
Speaker 1: file dock worker is averaging between five and a half
Speaker 1: and six days of work every week since this surge
Speaker 1: began last June. Then you've got the warehouse workers that
Speaker 1: were really hampered by COVID because they typically work in
Speaker 1: teams in closed spaces, and with the advice of the
Speaker 1: medical experts, we had the physical distancing the face coverings
Speaker 1: and gloves, but also smaller teams so we weren't bunched
Speaker 1: in the same capacities that we were before the IRIS
Speaker 1: started to spread. So that, in part, we believe had
Speaker 1: an effect on how slow the movement through the warehouses,
Speaker 1: distribution and fulfillment centers was and why they filled up
Speaker 1: so quickly during this search. So all of that is
Speaker 1: important to us. But with six point five million Americans
Speaker 1: still out of work compared to pre COVID days, we
Speaker 1: think there are opportunities, and we've sent this to the
Speaker 1: Secretary of Commerce, Gina Romando, to look at a national
Speaker 1: export policy. Export jobs in general, compared to other segments,
Speaker 1: pay about seventeen eighteen percent more than their competitors. Getting
Speaker 1: folks back into the areas of agriculture, which is so
Speaker 1: big here in California, throughout the country, manufacturing broadly, the
Speaker 1: auto sector and tiered suppliers, we think will help stimulate
Speaker 1: that trade and break down some of the barriers to
Speaker 1: get the American export companies back in touch with their
Speaker 1: overseas customers. So there's a little bit of both tracy,
Speaker 1: where we're trying to work on those core areas of
Speaker 1: employment here, but also trying to expand employment and jobs
Speaker 1: creation in other areas that needed today. Gene, you mentioned
Speaker 1: the longer Sherman and my understanding is they have a
Speaker 1: contract that's coming up the next round sometime in Can
Speaker 1: you tell us what you anticipate in those negotiations, like
Speaker 1: what should we be looking for, what will be the
Speaker 1: big issues that need to be hammered out. Yeah, The
Speaker 1: I LW Pacific Maritime Association contract expires June thirty two,
Speaker 1: and while I do not speak for the union or
Speaker 1: the employers association, I think that what we'll see is
Speaker 1: coming off a spirit of camaraderie like we've never witnessed before.
Speaker 1: When COVID first struck and we went into the emergency
Speaker 1: orders trying to figure out who was essential and who
Speaker 1: was not, the part of Los Angeles jumped into action.
Speaker 1: We got cleaning materials and solutions to make sure equipment
Speaker 1: and communications devices were safe to hand off between work efforts,
Speaker 1: and making sure that our workers had the necessary protective
Speaker 1: equipment to be safe on the job. Understood the medical
Speaker 1: recommendations of the state of the county, state and federal agencies.
Speaker 1: As we take that momentum and move into negotiations, I'm
Speaker 1: hopeful that folks will work on the key issues that
Speaker 1: are of great importance health and safety of the worker,
Speaker 1: making sure that they're paid adjust wage, and we have
Speaker 1: an opportunity for the proper transitioning as technology continues to
Speaker 1: be prevalent in our industry. But we'll also see areas discussed,
Speaker 1: I'm sure concerning robotics and automation, which is always a
Speaker 1: flashpoint in these discussions, and then we'll see what the
Speaker 1: future of work looks like. I believe there's going to
Speaker 1: be a day in the not too distant future where mechanics,
Speaker 1: as an example, who are skilled on multi tiered levels,
Speaker 1: will be operating with computers and not just wrenches. We'll
Speaker 1: have to make sure that there is training and development opportunity,
Speaker 1: up skilling and reskilling of our labor force to tackle
Speaker 1: the needs of the future supply chain. So all of
Speaker 1: that and more will probably be discussed and we'll be
Speaker 1: doing our level best. You may remember that Mere Garcetti
Speaker 1: and I were pretty visible during the last negotiation and
Speaker 1: at the proper time. President Barack Obama dispatched then US
Speaker 1: Labor Secretary Tom Perez to bring it home over the
Speaker 1: last seven days and help complete the tentative contract. So
Speaker 1: there'll be a lot of people around. There will be
Speaker 1: some of us around who have got pretty good experience
Speaker 1: and want to keep that cargo moving. But I will
Speaker 1: leave it to the experts on both sides of the table,
Speaker 1: who we work with very closely on a daily basis,
Speaker 1: to shepherd us through this contract negotiation, get us out
Speaker 1: the other side with good worker protections and companies that
Speaker 1: can move the cargo swiftly for the American consumer um.
Speaker 1: Speaking of the American consumers, so one of our most
Speaker 1: read stories at the moment is about seafood shortages and
Speaker 1: some seafood restaurants cutting things like scallops and other fish
Speaker 1: stuff off of their menus. And one of the things
Speaker 1: we've heard is that there are perishable items such as
Speaker 1: you know, fresh fish um that are getting stuck at
Speaker 1: various ports. So I'm just curious, is there anything you
Speaker 1: can do to prioritize shipments of perishable goods or groceries.
Speaker 1: Is that something that you do on a regular basis,
Speaker 1: Is it something that's become more of an issue given
Speaker 1: the current congestion issues. And then secondly, you know, not
Speaker 1: all choke points are good. Shortages are created equal, and
Speaker 1: the American government has expressed a lot of concern about,
Speaker 1: for instance, a shortage of semiconductors um that then hits
Speaker 1: the manufacturing industry. So I'm just wondering, do you make
Speaker 1: exceptions for prioritizing either perishable goods or goods that are
Speaker 1: sort of deemed as strategic or economically important for the US,
Speaker 1: like semiconductors. Yes, on both, then I'll explain a little
Speaker 1: bit about each. For perishable commodities, we do an appreciable
Speaker 1: business this here from Asia as well as the West
Speaker 1: coast of South America. And I think the easiest way
Speaker 1: to put it is that a white colored box with
Speaker 1: an engine on the front is typically a refrigerated box.
Speaker 1: Those of other color schemes for the company's logos are
Speaker 1: traditionally the nonperishable or dry boxes. So you've got not
Speaker 1: only a line of sight if you're a dock worker
Speaker 1: looking at these, but we have plans across the board
Speaker 1: in the industry lining up these refrigerated boxes in certain
Speaker 1: areas or what we call bays on the vessel for
Speaker 1: stowage purposes has been a core competency in the industry
Speaker 1: for decades now, so we know exactly where these containers
Speaker 1: are of the perishable variety on a particular ship at
Speaker 1: any time during its voyage. Typically those are prioritized to
Speaker 1: be unloaded early in the sequencing of discharge, and they
Speaker 1: are placed at a certain location on the terminal where
Speaker 1: they're plugged in immediately to the electrical grid UH here locally,
Speaker 1: as an example in Los Angeles, the line up side
Speaker 1: of the dock worker the trucker. The logistition is all
Speaker 1: right there with that type of product. And fortunately, as
Speaker 1: we've continued to plan in those areas, we have not
Speaker 1: heard or witnessed too many service failures to this point
Speaker 1: because of this huge surge of cargo that are perishables
Speaker 1: are going unserviced and uh and going bad on the
Speaker 1: other side with respect to priority products. This is where
Speaker 1: digitization really comes in and shows its wares. Being able
Speaker 1: to have highlighted in our port community system. The port optimizer,
Speaker 1: what cargo is hot as we call it, or prioritized
Speaker 1: to make sure that we can really speed it through
Speaker 1: the system has been also a competency that's been driven
Speaker 1: by this digitization product. So I think we're doing a
Speaker 1: pretty fair job as an industry. There's much more improvement
Speaker 1: that we must we must participate in, and in fact,
Speaker 1: we categorize for public consumption our metrics around how long
Speaker 1: container sit, where they're going to be going to next,
Speaker 1: what the next movement is. And while we've just recently
Speaker 1: uncovered some real problematic areas of containers sitting for enormous
Speaker 1: amounts of time, we're doing a pretty good job on
Speaker 1: speeding up the containers that we have a line of
Speaker 1: sight on earlier in the path from Asia to Los Angeles.
Speaker 1: So we've got to keep pulling people together, working and
Speaker 1: bringing folks at the confluence here of all these service
Speaker 1: providers activities right here at the port to stepping it
Speaker 1: up every day, especially in times when we've got so
Speaker 1: much gargo to manage and easily things could slip through
Speaker 1: the craft gene. You know. The first I think the
Speaker 1: first episode that we did and maybe even its back
Speaker 1: in January when we started looking at supply chains and
Speaker 1: we talked to Mark Levinson, who is the economist and
Speaker 1: author of the book The Box and one of the
Speaker 1: things that's come up that he brought up, and it's
Speaker 1: come up in some of Bloomberg's reporting, is the trend
Speaker 1: of much larger vessels and and they take longer to
Speaker 1: get in and out, they're less efficient, and as Mark
Speaker 1: pointed out, they also take longer to unload their wider
Speaker 1: and so the mechanical arms have to go deeper into them.
Speaker 1: How big of an issue is that, the sort of
Speaker 1: ongoing increase in vessel size, and how much does that
Speaker 1: contribute to bottlenecks at the ports when so many just
Speaker 1: sort of very large ships are all there at once. Yeah,
Speaker 1: I think it's a variable in the equation across a
Speaker 1: number of areas. First to answer the question, I think
Speaker 1: it's one that has to be thought of very carefully,
Speaker 1: because you think big ship, you load a lot of containers,
Speaker 1: and then you go from there. But as you rightly say,
Speaker 1: you've got landside opportunities, you've got timing with schedules, et cetera.
Speaker 1: But I'll give you one stat that I think I
Speaker 1: I'm most impressed with here, and that's eleven thousand. At
Speaker 1: the Port of Los Angeles, we're averaging an exchange of
Speaker 1: eleven thousand container units per vessel call, which today is
Speaker 1: the best in the world. So even as the ships
Speaker 1: have gotten larger and wider, as you say, Joe coming
Speaker 1: in here, the work that's done for every vessel call,
Speaker 1: we're moving more cargo per vessel than anybody else on
Speaker 1: the face of the earth. Now that comes with adaptation
Speaker 1: as well. Used to be when I started off in
Speaker 1: the industry, a big ship was container units. Today, the
Speaker 1: port of Los Angeles, fortunately with a lot of forethought
Speaker 1: from my predecessors, has been able to welcome the largest
Speaker 1: ships in the world at twenty three thousand container units
Speaker 1: and work them without a hitch. But they take longer,
Speaker 1: So you've got to line up more trains. You've got
Speaker 1: to have more land on your terminals to service them.
Speaker 1: Because you've got more containers. You've got to be able
Speaker 1: to get truck gates in and out over a wider
Speaker 1: time frame than just working eight to five during the
Speaker 1: day as we had done for for decades in the past.
Speaker 1: So there has to be a just spent all the
Speaker 1: way and along the way. But the key for the
Speaker 1: liner shipping companies is if they can put a six
Speaker 1: ship rotation in from North Asia to Los Angeles and
Speaker 1: they can leave Shanghai every Monday morning at eight and
Speaker 1: do that consecutively week in and week out. Then we're
Speaker 1: doing our job here right now, that's not the case
Speaker 1: because of all those congestion points that we've talked about
Speaker 1: during the show. But that's the task at hand, So
Speaker 1: the bigger vessel can be managed. Adjustments have to be
Speaker 1: made landside, they have to be made on the water side.
Speaker 1: But the work of these longshoreman women and logisticitions in
Speaker 1: our marketplace in southern California, where the institutional knowledge, I
Speaker 1: would also say is world class, has been proven to
Speaker 1: be a net positive for us. So one of the
Speaker 1: themes that keeps coming up on all these supply chain
Speaker 1: or logistics episodes is the idea of expectations. And at
Speaker 1: the beginning of the pandemic, everyone thought we were going
Speaker 1: into a deep, deep recession, we were going to get
Speaker 1: a massive pull back by US consumers, and of course
Speaker 1: the opposite ended up happening, and we had this huge
Speaker 1: import boom as everyone stay at home and ordered a
Speaker 1: bunch of stuff online or you know, redid their houses,
Speaker 1: that sort of thing. I'm just wondering with the benefit
Speaker 1: of hindsight, Is there anything you would have done differently
Speaker 1: over the past twelve or fifteen months. Yeah. Sure, And
Speaker 1: a number of things start with our natural convening powers
Speaker 1: to bring people together. As I mentioned to your, industry
Speaker 1: tends to be a little bit siloed. Private sector companies
Speaker 1: really work with their customers closely. Broader and rader good
Speaker 1: is not normally in the front of mine for many
Speaker 1: folks in the industry. So bringing people together a little
Speaker 1: bit earlier, although the information was moving fast and most
Speaker 1: of us were trying to take care of the health
Speaker 1: and safety of our worker, our staff, our families, that
Speaker 1: probably could have been sped up a little bit. But again, Tracy,
Speaker 1: as I mentioned to you, we we had a press
Speaker 1: conference with the results of our main numbers. We were down.
Speaker 1: And although I saw the pendulum moving about three times
Speaker 1: because we saw unevenness in the supply chain, you probably
Speaker 1: needed to get people to the table a little bit quicker.
Speaker 1: I think. Secondly, prepositioning assets knowing that we were gonna
Speaker 1: have a one way trade episode also would have helped
Speaker 1: us maybe a little faster. And thirdly, I wish I
Speaker 1: pushed on that past administration even more than I did
Speaker 1: to rectify these ill advised trade policies. We have absolutely
Speaker 1: hurt the American farmer and the American exporter oddly, and
Speaker 1: that has been if we look back, something in the
Speaker 1: systemic portion that has really amplified this area of how
Speaker 1: do you handle the search right because it's all one
Speaker 1: way trade, and if you can't bring back the assets,
Speaker 1: the crew and the power fast enough that you're gonna
Speaker 1: wind up in a situation like we are right now.
Speaker 1: But I think the industry generally has managed this unprecedented
Speaker 1: volume better than most had expected. We usually run a
Speaker 1: supply chain under the radar where folks don't want to
Speaker 1: talk to us on shows like this unless something's going wrong.
Speaker 1: And our business day to day is just that it's
Speaker 1: moving America's economy. It's keeping people employed and making sure
Speaker 1: those store shelves and those front porches have our groceries
Speaker 1: and toys and goods on them. And when it doesn't
Speaker 1: go that way, I think in the industry you say,
Speaker 1: if it bleeds, it leads, and that's what we've been
Speaker 1: seeing that folks are now interested because you've got shortages
Speaker 1: across the board, and whether it be the advent of
Speaker 1: the price of lumber doubling and tripling, the way that
Speaker 1: housing starts look, the purchases of homes, and the folks
Speaker 1: who wanted to redo this. I think from a prognosticator standpoint,
Speaker 1: it would have been pretty tough to hit a royal
Speaker 1: flush on all of these issues at one time. Well,
Speaker 1: it is true that we probably wouldn't have been doing
Speaker 1: so many episodes had it not been for all this tension,
Speaker 1: but it really has been great to learn all this stuff.
Speaker 1: You know, we just have a few more minutes left,
Speaker 1: but I want to talk a little bit about the
Speaker 1: future a little bit. Christmas people, there's been talking, okay,
Speaker 1: are we gonna is Christmas gonna get disrupted? Are they're
Speaker 1: gonna be problems getting toys? So I guess another two
Speaker 1: parter a is Christmas gonna be disrupted and be to
Speaker 1: what extent are retailers pulling forward orders even more because
Speaker 1: they're worried about Christmas? And to what extent is that
Speaker 1: pull forward effect contributing to the ongoing congestion. I'll go
Speaker 1: on record and say no, Christmas will not be disrupted.
Speaker 1: It will happen on decep again this year, but we're
Speaker 1: going to have to do a lot of jumping through
Speaker 1: hoops like we've done in the past to help out folks.
Speaker 1: I'll give you the example of the toy importers right
Speaker 1: most of their revenue was made up over a ten
Speaker 1: week span, even less in some cases, during the course
Speaker 1: of a year. And this is everyone from the large
Speaker 1: multinationals to the small family owned business that's maybe third
Speaker 1: or fourth generation today, or the folks that are just
Speaker 1: starting up their companies. So we understand the importance. And
Speaker 1: with all the folks that are paying attention to the the
Speaker 1: supply chain today, we don't shy away from the spotlight.
Speaker 1: The look at what we see right now, Joe, is
Speaker 1: that we're pivoting this moment between this surge and our
Speaker 1: traditional peak season. So we're starting to see back to
Speaker 1: school products, fall fashion, even Halloween items start to come in.
Speaker 1: And yes, to answer your question, a number of retailers
Speaker 1: have told me they're trying their level best to pull
Speaker 1: forward inventory. Get it in a little earlier. My advice
Speaker 1: to families and friends who asked me by your holiday
Speaker 1: gifts a little bit earlier this year as well, get online,
Speaker 1: go to the store and try to pre plan. I
Speaker 1: know I'm a last minute guy, but even I'm going
Speaker 1: to have to pivot a little bit this year. But
Speaker 1: also what we're seeing, and this comes directly from the merchandise,
Speaker 1: is that these big retail chains is that their manufacturers
Speaker 1: are behind on their orders as well. I mean, you
Speaker 1: think about everything that's happened over the last seventeen to
Speaker 1: eighteen months. Even the factories in Asia are working around
Speaker 1: the clock trying to pick up every order they can
Speaker 1: and fulfill them, and they're struggling as well. But their
Speaker 1: output is higher than ever on record. So it's a
Speaker 1: matter of are you matching yourself up against aspirations that
Speaker 1: may not be attained versus are you just really blowing
Speaker 1: out numbers that no one's ever seen on the face
Speaker 1: of the earth. To how do you get the American
Speaker 1: consumer in a good place? And that's why building confidence
Speaker 1: on within your supply chain. We also loved the President's
Speaker 1: executive order on supply chain here again it's putting focus
Speaker 1: where we needed to, whether it be agriculture, the chips
Speaker 1: that Tracy mentioned and those going into cars and washers
Speaker 1: and dryers, just about everything we have today. We've got
Speaker 1: to get a line of sight on what this means
Speaker 1: and There is a difference in the supply chain between
Speaker 1: sourcing and procurement, transportation, the chain itself, the delivery and distribution.
Speaker 1: So delineating all those segments and trying to just keep
Speaker 1: fine tuning them is the job of leaders in this
Speaker 1: industry today. I guess the I was about to say
Speaker 1: the million dollar question, but it's probably closer to a trillion.
Speaker 1: How long do you expect the congestion issues to go
Speaker 1: on for? It will be a while. There was a
Speaker 1: major retailer that told me that their inventory system nationwide,
Speaker 1: retailer with over three thousand stories said their inventory right
Speaker 1: now is it about forty percent of an acceptable level.
Speaker 1: So even as we passed through these, uh the seasonal
Speaker 1: effects that I just mentioned, these guys are gonna keep
Speaker 1: buying and buying and buying. As we go into the
Speaker 1: latter part of the fall, we're gonna get those last
Speaker 1: minute orders coming through, and we're gonna have to thread
Speaker 1: this needle from a mile away just about every transaction
Speaker 1: to get it done. What I do see, Tracy, is
Speaker 1: given where we stand right now with the delta variant,
Speaker 1: that's gonna go a long way to telling us where
Speaker 1: we're gonna wind up because we're starting to see here
Speaker 1: in southern California, and I follow this nationwide. The number
Speaker 1: of diagnosed illnesses are going up rapidly, hospitalizations, even fatalities,
Speaker 1: many of which unfortunately due to folks who are unvaccinated.
Speaker 1: But it's hampering the rest of us. And I had
Speaker 1: an outlook that basically said after Lunar New Year and
Speaker 1: into the first quarter, we'd start to see a leveling
Speaker 1: of this import freight, not a steep decline, but leveling
Speaker 1: because we as the American consumer, would go back more
Speaker 1: more wholly into the service sector, getting back on airplanes,
Speaker 1: going out to ball games, and restaurants, going to the movies,
Speaker 1: and that may slow a little bit, so we may
Speaker 1: keep buying online for a while. We also have to
Speaker 1: look at, as I mentioned, squeezing all the opportunities out
Speaker 1: of the port complex that we can, but in unison
Speaker 1: with these other folks, the warehouses, the railroads, trucks, et cetera.
Speaker 1: In the shipping lines, I want to squeeze more productivity
Speaker 1: out of the port, meaning if we have to work
Speaker 1: flex ships, if we have to open a little bit earlier. Now, again,
Speaker 1: these are agreements between labor and management that have to
Speaker 1: be worked out through a collective bargaining agreement, but I
Speaker 1: think there's some opportunity to add a little bit in
Speaker 1: the mornings, a little bit later at night, and get
Speaker 1: the truckers and others confident that we can move the
Speaker 1: cargo through and service them. That's all going to play
Speaker 1: into this as well. But this is going to be
Speaker 1: a strong second half of the year. I don't see
Speaker 1: us chipping down too much on these anchorage numbers beyond
Speaker 1: what we've been attempting to do. So far, we're about
Speaker 1: half of where we were at the highest point. We
Speaker 1: got down to single digits, and then the South China
Speaker 1: folks came back to work off of their third wave
Speaker 1: of COVID. So we're gonna keep watching the incoming and
Speaker 1: try to take advantage of all the opportunities to push
Speaker 1: the car go through. We're gonna be in this for
Speaker 1: a while. Gene, that was absolutely fantastic. I learned a
Speaker 1: ton from that, and it was a real treat to
Speaker 1: have you come on odd Lots, So thank you so
Speaker 1: much for joining us. Well, thank you both Joe and
Speaker 1: Tracy for the opportunity, Laura for running the program today.
Speaker 1: Really appreciate the chance to get some of the information
Speaker 1: out there. Absolutely, Thank you so much, Jane. Take care
Speaker 1: all right, you too, Thank you, Thanks Jane. Uh So,
Speaker 1: there you have it. We're gonna be in this for
Speaker 1: a while. Huh. It's not very encouraging, is it. Yeah,
Speaker 1: I guess I guess. Uh. Well, one encouraging thing was
Speaker 1: Christmas is saved. Um, I guess that's good. If you
Speaker 1: order early, just just just make me. I'm definitely a
Speaker 1: late shopper two for gifts. So I really he was awesome.
Speaker 1: That was great. I learned a ton from uh that episode,
Speaker 1: and I thought that was a great education in the
Speaker 1: importance and this sort of like the role that the
Speaker 1: ports play. I mean, of course it's sort of intuitive
Speaker 1: reports play a crucial role because everything has to go
Speaker 1: through the ports, all imports, but uh, just sort of
Speaker 1: like understanding the relationship that they have with the truckers
Speaker 1: and the shipping companies and the warehouses cetera, the retailers.
Speaker 1: I learned a lot from that conversation. Yeah. So two
Speaker 1: things I guess um struck me. So. The first one
Speaker 1: is we've spoken about this before, but this idea of
Speaker 1: technology upgrades for shipping and the digitization process. UM. So
Speaker 1: clearly this is a complex industry. You have so many
Speaker 1: different factors going into supply chains. Can technology help you
Speaker 1: organize them and achieve some efficiencies? Um, that would help
Speaker 1: you move goods from A to B. That keeps coming up.
Speaker 1: And then the other thing that struck me a sort
Speaker 1: of related topic, but this idea of prioritizing strategic shipments
Speaker 1: and being able to say, well, this ship has a
Speaker 1: bunch of containers full of semiconductors, and they're important for
Speaker 1: supply chains for a bunch of important industries, and so
Speaker 1: we're going to get them out sooner. That's a really
Speaker 1: interesting thing. And I wonder if that's a big shift
Speaker 1: for ports and other shipping industries. I wonder if that's
Speaker 1: something that's going to become more important going forward. Maybe
Speaker 1: you don't need like the shipping container full of like
Speaker 1: I don't know, maybe toys for Christmas, but like semiconductors
Speaker 1: might be more important. Yeah. No, So many like interesting
Speaker 1: things and thinking about like potential for productivity enhancements and
Speaker 1: how long a truck driver might just be sitting there
Speaker 1: are waiting to pick something up, even when there are
Speaker 1: containers on the ground that are waiting to be moved.
Speaker 1: You know, this sort of like the opportunity still to
Speaker 1: just make these turnaround times faster. I don't know, just
Speaker 1: lots of lots of interesting details. We should go out
Speaker 1: to the ports sometimes. Yeah, I would totally go to
Speaker 1: the ports. We still have a lot to do on
Speaker 1: transport and supply chains, and one thing that I really
Speaker 1: want to do is palletts, palets. Okay, yeah, okay, pallets, palettes, packaging, palets,
Speaker 1: rail and barges are free that we still have to do.
Speaker 1: We definitely have to do real we haven't done a
Speaker 1: single real one. And plastics as well, like plastic packaging,
Speaker 1: there's plenty to talk about. Yeah, okay, um, the series continues.
Speaker 1: Shall we leave it there? Let's leave it there, all right.
Speaker 1: This has been another episode of the All Thoughts Podcast.
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway and I'm Joe Why Isn't though? You can
Speaker 1: follow me on Twitter at the Stalwart. Follow our producer
Speaker 1: on Twitter, Laura Carlston. She's at Laura M. Carlson. Follow
Speaker 1: the Bloomberg head of podcast, Francesca Levi at Prancesca Today,
Speaker 1: and check out all of our podcasts at Bloomberg under
Speaker 1: the handle at podcasts. Thanks for listening.