Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisental and I'm Tracy Halloway. Tracy, By this point,
Speaker 1: I think are any Odd Lots listener really anyone in
Speaker 1: the world is totally familiar with the supply chain disruptions
Speaker 1: and the bottlenecks, particularly at the ports and particularly at
Speaker 1: the Port of Los Angeles. Wait, there's supply chain disruptions.
Speaker 1: Have you not heard about it? I haven't. I haven't
Speaker 1: spent hours of my life this year talking about supply
Speaker 1: chain disruptions. No, you're absolutely correct. There are all sorts
Speaker 1: of superlatives that you could throw around, but we know
Speaker 1: that there are dozens and dozens of ships, for instance,
Speaker 1: waiting off the coast of the Port of l A
Speaker 1: trying to doc We know that this has become a big,
Speaker 1: big issue for the Biden administration as well. Yeah, exactly.
Speaker 1: I mean, obviously bottlenecks perhaps contribute to inflation, It creates
Speaker 1: anxiety around the holidays because people worry about gifts getting shipped,
Speaker 1: and of course you know it's not great for the
Speaker 1: economy overall. So we have a very special guest today,
Speaker 1: and I want to jump right into our episode to
Speaker 1: discuss it, We're gonna be speaking to a John Porcari.
Speaker 1: He's a former Deputy Secretary of Transportation during the Obama
Speaker 1: administration and he is currently serving as Port Envoy to
Speaker 1: the White House Supply Chain Disruptions Task Force. So he's
Speaker 1: been tasked by the Biden administration to fix the ports
Speaker 1: situation or to help fix it. John, thank you so
Speaker 1: much for coming on Odd Lots. It's my pleasure. So
Speaker 1: I want to start with the actually sort of theoretical question,
Speaker 1: which is, what is it that a overseer representing the
Speaker 1: government can do in theory to help coordinate a solution
Speaker 1: to these bottlenecks that some of the private public actors
Speaker 1: currently involved couldn't do with previously without some kind of oversight. Well,
Speaker 1: first and foremost, the role is an honest broker role.
Speaker 1: It's to get the parties together. And if you think
Speaker 1: of the whole supply chain, these are parts of the
Speaker 1: supply chain that typically in the past have not talked
Speaker 1: to each other much certainly have not exchanged data. So
Speaker 1: that honest broker role is a crucial one in unlocking
Speaker 1: underlying operational issues and pushing hard for the kind of
Speaker 1: collaboration that you're actually seeing at the ports of Los
Speaker 1: Angeles and Long Beach right now, where goods movement is
Speaker 1: much more fluid than it was six or eight weeks ago.
Speaker 1: So presumably as part of this role, you have been
Speaker 1: spending a lot of time at the ports talking to
Speaker 1: various parties. I'm curious what you're learning there. Is there
Speaker 1: anything that surprised you and what have you sort of
Speaker 1: pinpointed as the major issues here. It's uh, it's very interesting.
Speaker 1: I thought I knew the industry pretty well having the
Speaker 1: Port of Baltimore, UH in the past, but the scale
Speaker 1: and scope of the two ports, which are really one
Speaker 1: large port complex, Los Angeles and Long Beach, is just amazing.
Speaker 1: So the container imports coming into the country are coming
Speaker 1: through those ports, and the pandemic really changed everything in
Speaker 1: terms of trade as well. So during the pandemic, we
Speaker 1: switched our buying patterns from restaurants and theaters to buying things.
Speaker 1: The pandemic laid bear and underlying reality, which was the
Speaker 1: goods movement chain was creaking along showing its seams before
Speaker 1: the pandemic. But what we ended up with during the
Speaker 1: pandemic with those change buying patterns was really gridlock at
Speaker 1: those two ports. Congestion on the container movements at other ports,
Speaker 1: but gridlock at those two. Can you give an example.
Speaker 1: You mentioned that what your role is an on as
Speaker 1: a broker get people communicating directly or communicating in a
Speaker 1: way they weren't before. Can you give it clear example
Speaker 1: of a situation that was arising because the communication wasn't happening,
Speaker 1: And how opening up that lines has helped improve or
Speaker 1: can improve container through put. Yeah, they're actually multiple examples
Speaker 1: of that. So if you just take it sequentially from
Speaker 1: the ocean carriers to the terminal operators to the cargo owners,
Speaker 1: the beneficial cargo owners at the other end of the
Speaker 1: goods movement stream, there were clear examples where the ocean
Speaker 1: carriers and the terminal operators weren't communicating with each other
Speaker 1: on things as basic as as throughput, and the cargo
Speaker 1: owners who owned what the contents of those boxes in
Speaker 1: many cases had had no intention or no need to
Speaker 1: take those boxes off the docks immediately. They were essentially
Speaker 1: using them for free storage. Uh. And one of the
Speaker 1: early conversations was was clearing that up and and actually
Speaker 1: making sure that everyone understood each other's pressures, motivations and
Speaker 1: what they were doing. The way we've operationalized this is
Speaker 1: we have calls three mornings a week Pacific time, and
Speaker 1: we have everybody on those calls, the ocean carriers, the
Speaker 1: terminal operators, the railroads, trucking companies, the Federal Maritime Commission,
Speaker 1: the Surface Transportation Board, the leadership of both ports, everyone
Speaker 1: who plays a role in that part of the goods
Speaker 1: movement chain. And we literally are fostering real time conversations
Speaker 1: as part of that. So we've moved from the first
Speaker 1: couple of weeks that I was on the job, I
Speaker 1: was in a listening mode and and everybody was pointing
Speaker 1: fingers at everyone else. I get that, Okay, you've said
Speaker 1: your piece. Now it is time to actually be productive
Speaker 1: and to work with each other. And that kind of
Speaker 1: forcing mechanism. On the light side, it's an honest broker role.
Speaker 1: On the little bit heavier side, it's pushing hard to
Speaker 1: get the parties to actually talk to each other. They're
Speaker 1: sharing information now on an ad hoc basis, and in
Speaker 1: the longer term, we want to make sure it's more
Speaker 1: systematically providing transparent data throughout the system to the benefit
Speaker 1: of all the private sector parties that that run the
Speaker 1: good supply chain. I wanted to ask you about this,
Speaker 1: but in terms of incentivizing behavior, how do you actually
Speaker 1: do that given the various stakeholders here and the fact
Speaker 1: that they might have differing interests. So you mentioned one
Speaker 1: company basically, you know, using the port as free storage
Speaker 1: for some of its containers. It's not in its interest
Speaker 1: to necessarily resolve that. Uh. And I know that Jane Siroca,
Speaker 1: another former Ablots guest and the executive UM, the CEO
Speaker 1: of the Port of l A, he was talking about
Speaker 1: how it's been a sort of uphill battle to get
Speaker 1: companies signed onto the Accelerate Cargo l A program. So
Speaker 1: how do you actually incentivize that behavior? Are there sticks
Speaker 1: or carrots that you can use in this process? There
Speaker 1: are both carrots and sticks, um, and wherever possible, we've
Speaker 1: been incentivized and using carrots. So starting with pushing the
Speaker 1: ports themselves to go seven, to make sure that they're
Speaker 1: capable of going seven, and make sure that labor who
Speaker 1: signed on very quickly signed on readily to seven operations
Speaker 1: that they were together sending a strong signal a green
Speaker 1: light that were open for business. Um, we have lots
Speaker 1: of off peak capacity. If you want to move your
Speaker 1: cargoes in and out of the ports, exports as well,
Speaker 1: off peak nighttimes is the time to do it. You
Speaker 1: all are familiar with our peers around the world, most
Speaker 1: of whom are seven in their operations. The United States,
Speaker 1: its ports and it's good supply chain are in many
Speaker 1: ways an anomaly because we're not. So it was it
Speaker 1: was first the incentive the carrots of the capacity that's
Speaker 1: available off peak, and then matching that, marrying that if
Speaker 1: you will, with major cargo owners that can drive those
Speaker 1: kind of volumes that can actually change the use of
Speaker 1: the ports, including the middle miles of trucking and and
Speaker 1: rail and putting those things together. And so if you
Speaker 1: look back on the last eight weeks or so, there
Speaker 1: actually is a logical sequence to the starting with getting
Speaker 1: the ports to give a green light labor saying absolutely
Speaker 1: we're on board, going to a number of the very
Speaker 1: large cargo owners they can drive the market, and saying okay,
Speaker 1: it's your turn to make sure your warehouses, your distribution centers,
Speaker 1: your fulfilming centers are able to receive these cargoes and
Speaker 1: let's work off peak You can't flip a light switch
Speaker 1: and and have it happen overnight, but you can change
Speaker 1: the way that we operate collectively as a system over time.
Speaker 1: What you're seeing now is more and more of that
Speaker 1: that that is actually happening. And those two ports are
Speaker 1: operating much more more fluid lee than they did a
Speaker 1: few weeks ago. But they're also moving much more towards
Speaker 1: twenty four seven operations and doing that, which is where
Speaker 1: the long term capacity is. Just on seven question, two
Speaker 1: quick things come to mind is A. I mean, I
Speaker 1: think one of the big stories in the economy these
Speaker 1: days is tight labor markets. So I'm curious if that's
Speaker 1: a challenge, just like finding the additional hours and too.
Speaker 1: You know, we had an episode recently with Ryan Peterson,
Speaker 1: the CEO at flex Sport. He talked about some other
Speaker 1: things that make this more difficult, like say, local town
Speaker 1: ordinances where the inland warehouses exist may have rules that
Speaker 1: say no delivery after a PM because the neighbors don't
Speaker 1: like noise pollution and so forth. How much is a
Speaker 1: you know, how do you solve the labor part and
Speaker 1: then just some of the dealing with you know, local
Speaker 1: entities that probably you know, the White House isn't typically
Speaker 1: used of dealing with or maybe the towns local rags.
Speaker 1: How do you sort of clear those out so that
Speaker 1: at least on a temporary basis, that doesn't become a
Speaker 1: big problem. Yeah, good questions. At first. On the labor side,
Speaker 1: labor has been a true partner from the very beginning.
Speaker 1: First of all, working through the pandemic. You know, we
Speaker 1: have a new definition of frontline workers and uh UM
Speaker 1: the i l WU, the Longshoreman's Union lost about twenty
Speaker 1: members to COVID and kept working throughout the process and
Speaker 1: very early on signed on over the longer term because
Speaker 1: we know today's volumes are likely the floor for the future,
Speaker 1: not the ceiling. We're clearly on the recruitment, retention, and
Speaker 1: especially training side for our longshoreman. We're going to have
Speaker 1: to make sure that we're providing the training and other
Speaker 1: opportunities that they need. And then when you get to
Speaker 1: the local part of it. As a former former local
Speaker 1: UM government person myself, land use is a local prerogative
Speaker 1: UM and it is in the US. It has done
Speaker 1: at a local level. We've worked this at a retail level,
Speaker 1: and it's been things like talking directly to mayors and
Speaker 1: city managers about specific sites and trying to bring together
Speaker 1: that local government with for example, some of the Steven
Speaker 1: Oring and other companies that want to use those sites,
Speaker 1: and being again the honest broker in that relationship and
Speaker 1: at least one case, working through what the potential benefits
Speaker 1: for the city can be. You know, what, if you're
Speaker 1: going to use this site on a temporary basis, what's
Speaker 1: in it for that municipality and can they, for example,
Speaker 1: get some tree planting other environmental benefits out of it
Speaker 1: in addition to revenue. So where necessary, we've done it
Speaker 1: on a case by case in retail basis. I'm pleased
Speaker 1: to say that we have a great partner in the
Speaker 1: State of California in this where the state is doing
Speaker 1: that as well, and the state, given their daily working
Speaker 1: relationship with municipalities and counties throughout the state, is trying
Speaker 1: to open up sites as well. Uh, the Inland Empire
Speaker 1: area has about two billion square feet of distribution facilities
Speaker 1: and a vacancy rate of two percent. And we can
Speaker 1: all do the math and understand how tighter market that is.
Speaker 1: The solutions that you've seen that are short term solutions
Speaker 1: have been For example, for port properties that are in transition,
Speaker 1: they may have been former brown field properties that will
Speaker 1: will be converted over time to port uses, but as
Speaker 1: an interim use are used for empty container storage. There
Speaker 1: are a number of private sites nearby the ports that
Speaker 1: have been used for the same that capacity is close
Speaker 1: to being maximized. But there's also work further inland, for example,
Speaker 1: to identify properties that can be used. We started early
Speaker 1: on by looking at U S Government properties, both military
Speaker 1: and civilian that might be useful for those purposes. And
Speaker 1: we've been through several rounds, as you know, of a
Speaker 1: base relignement and closure process says where the military surplus
Speaker 1: most of their property that they didn't weren't truly using
Speaker 1: and weren't essential for national defense. So it's kind of
Speaker 1: slim pickings for both on both the civilian and military
Speaker 1: side for properties. The States looking at state properties as well,
Speaker 1: and as I mentioned, there's a number of private properties.
Speaker 1: These are short term operational strategies, and the whole thrust
Speaker 1: of the work we've been doing has been bifurcated into
Speaker 1: this short term operational changes and and longer term, more
Speaker 1: fundamental changes that will make for a more efficient private
Speaker 1: sector goods movement chain in the In the short term,
Speaker 1: most of these operational changes that we could talk about
Speaker 1: both both on doc at the ports and inland work
Speaker 1: at the margins. But the fact is those margins add
Speaker 1: up um and if you keep working this process, you're
Speaker 1: getting more and more in the way of operational improvements.
Speaker 1: That's what you've been seeing the last couple of weeks
Speaker 1: at the two ports, where throughput is much better than
Speaker 1: it has been. The process of picking up empty containers
Speaker 1: through what are called sweeper vessels, bringing essentially empty vessels
Speaker 1: in and just loading them up with empty containers and
Speaker 1: sending them back to their points of origin is done
Speaker 1: now on a systematic basis. Uh, that's actually really making
Speaker 1: a difference. Well, maybe we could talk about some of
Speaker 1: those longer term solutions as well. And I'm aware that
Speaker 1: the White House put up a blog recently calling on
Speaker 1: the maritime watchdog, the Federal Maritime Commission, to actually do
Speaker 1: something about the big three shipping alliances who basically control
Speaker 1: a lot of the routes and rates um for the
Speaker 1: containers that we've been talking about. What are some of
Speaker 1: the measures that you think the FMC should actually consider
Speaker 1: in UM, you know, taking on this very very large industry. Well,
Speaker 1: the FMC, of course, is an independent agency. And before
Speaker 1: I get to the FMC, I think we should briefly
Speaker 1: outline some of the intermediate term steps that are already
Speaker 1: underway at the federal and state level. So, for example,
Speaker 1: an unprecedented partnership between the state of California and the
Speaker 1: federal government was announced two weeks ago by the White
Speaker 1: House where a five billion dollar credit facility basically a
Speaker 1: five billion dollar credit line for the TIFFIA and RIFF
Speaker 1: loan programs, which are the two federal infrastructure loan programs,
Speaker 1: was extended to the state of California. UM. And if
Speaker 1: you think about how federalism works in the US, where
Speaker 1: some of the funding is at the federal level, but
Speaker 1: the project selection is at the state and local level,
Speaker 1: that actually gives the state of California a hunting license
Speaker 1: for the first time ever to actually build a program
Speaker 1: of projects not just at the ports, but inland from
Speaker 1: the ports. So it might be rail capacity, it might
Speaker 1: be rail grade elimination projects. UM, it might be freeway capacity,
Speaker 1: it might be purchasing sites and modifying them for you
Speaker 1: his intermodal container transfer facilities. One of the early steps
Speaker 1: was this unprecedented deal with the state of California to
Speaker 1: put the state in the business of actually caring about
Speaker 1: the goods movement chain throughout the state. And this is
Speaker 1: not just southern California, by the way, so it's for
Speaker 1: the Port of Oakland, for example. It's every bit is important,
Speaker 1: and the state has been very aggressive in building this
Speaker 1: program of projects and working through a process with all
Speaker 1: the stakeholders to prioritize that and and what you'll see
Speaker 1: is a whole generation of projects where the local funding
Speaker 1: at the state and local level is actually a long
Speaker 1: term loan program that the federal government is extended to it.
Speaker 1: So that's one important part of it. The other part,
Speaker 1: which is an order of magnitude larger and is truly historic,
Speaker 1: is the President signing on Monday the bipartisan Infrastructure Deal
Speaker 1: which brings seventeen billion dollars to the ports um more
Speaker 1: or less evenly divided between waterside and landside. That's as
Speaker 1: a former port operator, I can tell you that is
Speaker 1: in order of magnitude and then some more than the
Speaker 1: federal government's done before. Let's let's get into what can
Speaker 1: be done with the ports. And one thing I'm particularly
Speaker 1: curious about is you mentioned at the beginning all the
Speaker 1: ports around the country are stressed to some extent, but
Speaker 1: not to the level of the Port of Los Angeles
Speaker 1: or the Port of Los Angeles in the Port of
Speaker 1: Long Beach. Are there things that you're working on right
Speaker 1: now that you can do in the short term to
Speaker 1: make it so that ships can go to a different
Speaker 1: port and find, you know, a port where they're not
Speaker 1: having the same issues, to relieve some of the congestion,
Speaker 1: or building out inland infrastructure so that those ports, whether
Speaker 1: it's on the East Coast or in Georgia or Texas
Speaker 1: or somewhere else, can have the capacity to take on
Speaker 1: more throughput. And is that also part of other short
Speaker 1: term things and other long term things that can ease
Speaker 1: our reliance on those two ports in California. Yes, excellent question. Um,
Speaker 1: let's remember what we're trying to do. We're trying to
Speaker 1: build in resiliency, fluidity, and velocity in the ports system,
Speaker 1: and so on the resiliency side, you're already seeing some
Speaker 1: of movement by the ocean carriers to diversify their ports
Speaker 1: a little bit, to to change the trade routes in
Speaker 1: the vessel strings to some extent to give them a
Speaker 1: little bit more resiliency. And today it's because of congestion
Speaker 1: UH in those two ports, but tomorrow it might be
Speaker 1: natural disaster, it might be some of the economic upset,
Speaker 1: so you're seeing some of that. One example of what
Speaker 1: we're doing in the short term as well is with
Speaker 1: the Port of Savannah, the number four ports in the
Speaker 1: country for containers, where we've worked with them and they've
Speaker 1: been very innovative in identifying a number of interior pop
Speaker 1: up sites that are on rail lines. You can have
Speaker 1: rail to truck connections at that are inland in the
Speaker 1: state of Georgia and in North Carolina for example, UM
Speaker 1: and we've found a way to actually help fund those projects.
Speaker 1: You'll see the first of them up and running in
Speaker 1: the next thirty to forty five days. So these are
Speaker 1: very short term where basically you're taking incoming loaded containers
Speaker 1: that are important to the country through Savannah. They're going
Speaker 1: on rail out to these sites where they can transfer
Speaker 1: by truck, so you're that much closer to the target markets.
Speaker 1: But one of the really important additional benefits is on
Speaker 1: the export side for agricultural exports, the agricultural exports that
Speaker 1: go through containers, and Georgia Savannah is the number one
Speaker 1: port country for containerized agricultural exports. Um those same pop
Speaker 1: up sites are hundreds of miles closer to the agricultural sources,
Speaker 1: so it's a lot easier to have a short dray
Speaker 1: of relatively short truck run to these pop up sites
Speaker 1: where you're putting it on trains and then out through
Speaker 1: the port of Savannah. That's one example of short term
Speaker 1: operational changes that really in this case on both the
Speaker 1: important export side help. We're encouraging other ports to do
Speaker 1: the same. You'll see, I think in generation of projects
Speaker 1: in the short term around the country that will help
Speaker 1: maximize the existing on doc capacity through interior pop up sites.
Speaker 1: The fundamental issue is the docks themselves. The ports themselves
Speaker 1: are such valuable pieces of real estate that you don't
Speaker 1: want containers dwelling there a second longer than you have to.
Speaker 1: You want to get them interior, or you want to
Speaker 1: get them out back on ships and to their target
Speaker 1: markets overseas. This might be slightly outside of your direct remit,
Speaker 1: but there are people out there who argue that you know,
Speaker 1: one of the fundamental problems here is that America is
Speaker 1: just getting too much of its supply of goods from abroad.
Speaker 1: And I mean you mentioned when we first started out
Speaker 1: this conversation that the pandemic really changed everything in terms
Speaker 1: of trade. We are just importing much, much more than
Speaker 1: we had previously. Does anything in the past experience of
Speaker 1: a year and a half suggest that maybe the White
Speaker 1: House should be reconsidering it's general trade policies towards China.
Speaker 1: And I can kind of see you arguing this this
Speaker 1: either way, Like you could either lower tariffs in order
Speaker 1: to increase the flow of goods into the States and
Speaker 1: hope that the ports can handle more of it, or
Speaker 1: you can maybe, um sort of swing the other way
Speaker 1: and say that we need to be fostering more of
Speaker 1: our manufacturing capacity within the United States itself. It's a
Speaker 1: great question, Tracy, and Um. You have to go back
Speaker 1: to the very beginning of the Biden administration when the
Speaker 1: President signed Executive Order on Competitiveness and set up very
Speaker 1: quickly after that a Supply Chain Disruption Task Force. This
Speaker 1: is a cabinet level task force. The president's tasks his cabinet, Essentially,
Speaker 1: the Secretaries of Transportation commerce, agriculture, and others to look
Speaker 1: at some of the fundamental issues and while we're making
Speaker 1: short term corrections and working with industry partners in the
Speaker 1: short term, to really think about the long term as well.
Speaker 1: So on a topic like semiconductors, where as you well
Speaker 1: know the impact that the semiconductor shortage has had on
Speaker 1: the auto industry, for example, what should be the right
Speaker 1: balance for the long term in the country's best interests
Speaker 1: between domestic manufacturer and overseas manufacturers. So this Supply Teams
Speaker 1: Disruption Cabinet level task force has really gotten a headstart
Speaker 1: and a running start on looking at some of those
Speaker 1: UM issues and in rethinking what's in the best term
Speaker 1: interests of the United States. And I think we all
Speaker 1: take to heart the lessons that have been learned during
Speaker 1: by the disruptions in the pandemic, a COVID incident in Vietnam,
Speaker 1: cant impact clothing in the uf UM, those kinds of
Speaker 1: disruptions to a just in time inventory system or something
Speaker 1: that I think people are thinking long and hard about
Speaker 1: UM and and making sure that we're not as vulnerable
Speaker 1: in the future. John, I know we're very mindful of
Speaker 1: your time, and you just have a few minutes left.
Speaker 1: I just want to get very clearly where things stand
Speaker 1: in terms of progress. You mentioned speed and throughput of
Speaker 1: containers improving, but I see other measures, specifically measures of
Speaker 1: how many ships are waiting in the water or how
Speaker 1: many days they're waiting in the water, that still seem
Speaker 1: to be going up. Talk to us about what stats
Speaker 1: are improving and what stats it looks like the ship
Speaker 1: one has not started to improve. How soon will it
Speaker 1: be until that the number of actually ships just waiting
Speaker 1: to unload start to come down. Well, everyone looks to
Speaker 1: the number of ships in San Pedro Bay because it's
Speaker 1: a great visual and UH it is UH at an
Speaker 1: all time high. What that doesn't measure is the actual
Speaker 1: t e US the containers that are importing and exporting
Speaker 1: through that and UM. Part of what's going on in
Speaker 1: the vessel count is that there are new entrant carriers
Speaker 1: ocean carriers UH that are running relatively small chartered vessels.
Speaker 1: So these might be three thousand or four thousand t
Speaker 1: EU instead of the twenty four thousand t EU behemoths
Speaker 1: that that are that you see in the ports many
Speaker 1: other times. So the vessel count is very misleading. You
Speaker 1: should be looking at the number of containers moving and on.
Speaker 1: On that score, it's actually very good news. So it
Speaker 1: was perhaps a little bit controversial when it was proposed
Speaker 1: a couple of weeks ago and first publicly discussed, but
Speaker 1: the potential to impose a per container fee on the
Speaker 1: ocean carriers for long dwelling containers basically a hundred dollar
Speaker 1: fee that goes up by a hundred dollars per day
Speaker 1: per box for any truck containers that have been there
Speaker 1: more than nine days, any rail containers more than six days.
Speaker 1: We've had some remarkable progress on that front. So the
Speaker 1: number of long dwelling nine day plus containers at both
Speaker 1: Ports l A and Long Beach on a combined basis
Speaker 1: is down thirty Since basically this fee was first proposed
Speaker 1: to go into effect on November one, we have held off.
Speaker 1: The ports have held off on actually imposing the fee
Speaker 1: give so far given the progress that's been made. But
Speaker 1: that has been one of the single most important elements
Speaker 1: in restoring fluidity to the ports, which were grid locked
Speaker 1: by lack of real estate. There are so many containers
Speaker 1: incoming in an outgoing on the docks that they couldn't
Speaker 1: the equipment could even operate in many cases. So that's
Speaker 1: one part of it. The other part that I think
Speaker 1: everyone should take note of is the ocean carriers stepping
Speaker 1: up and with the sweeper vessels that I described bringing
Speaker 1: in empty vessels, filling with both US exports and empty
Speaker 1: containers and sending them back to their point of origin,
Speaker 1: and then um extra loaders where they basically leave more
Speaker 1: of the capacity on a regular cargo vessel to take
Speaker 1: out more empties than what they brought in as as
Speaker 1: full containers. Those two combined efforts are making a real
Speaker 1: dent in the empties that are out there. So there's
Speaker 1: there's real progress to point to a lot of credit
Speaker 1: to the whole team, starting with the two executive directors
Speaker 1: of the ports and their senior management teams, but also
Speaker 1: the ocean carriers, the terminal operators, the truckers, the railroads
Speaker 1: and labor and and all of them. On these operational changes.
Speaker 1: You can both feel it getting better day by day,
Speaker 1: but you can measure the progress and um one of
Speaker 1: the things the White House has done has really put
Speaker 1: together away and you're seeing it in the White House
Speaker 1: blog to actually measure the progress. And so while it's
Speaker 1: a great visual to measure the number of ships out
Speaker 1: there at anchor. What we should be actually measuring is
Speaker 1: the throughput both ways. Do you have signposts for for
Speaker 1: your own success? You know, when do you sort of
Speaker 1: declare problem solved? And what are you looking at and
Speaker 1: making a statement like that in the three goals resiliency, fluidity,
Speaker 1: and velocity, knowing that the fluidity within the ports is
Speaker 1: the single most important element and it drives the velocity
Speaker 1: if you will, of goods getting back to a condition
Speaker 1: where the long dwelling containers are at least at their
Speaker 1: historic lows, if not lower. So, in other words, no
Speaker 1: import is is dwelling on the port longer than it
Speaker 1: has in the past. Uh, that's one obvious measure. Another
Speaker 1: one is the dwell time at the other end of
Speaker 1: the goods movement change. So, how long is a truck
Speaker 1: chassis with a container a full container on it, tied
Speaker 1: up at a distribution center. It shouldn't be more than
Speaker 1: forty eight hours. At the worst point in the system congestion,
Speaker 1: we were seeing some dwell times of eleven days at
Speaker 1: distribution centers. That's clearly a sign that the distribution part
Speaker 1: of it can't handle the volume. A lot of that
Speaker 1: has clued up, so so there are specific measures, but
Speaker 1: it's really important to build for the future at the
Speaker 1: same time. So the the five billion dollar credit facility
Speaker 1: with California, the seventeen billion dollars in the Biparson infrastructure deal,
Speaker 1: and the work throughout the Goods Movement chain on better
Speaker 1: data sharing are three metrics as well that I think
Speaker 1: are important in the mid and long term to follow
Speaker 1: as well. Well, John, we really appreciate you coming on,
Speaker 1: odd Love. There's a real treat given how much we've
Speaker 1: focused on this topic. And uh, maybe we'll have you
Speaker 1: back in a few months when you're ready to, uh,
Speaker 1: when it's no longer a crisis, or when you're ready
Speaker 1: to declare some sort of victory and talk about long
Speaker 1: term vision of logistics. But thank you so much for
Speaker 1: coming on. My pleasure, and let's remember what's at stake here,
Speaker 1: and this is about building a more competitive supply chain
Speaker 1: for the future economy countries. So thank you, absolutely, thank
Speaker 1: you so much. Job. That was great. Thanks John, appreciate it. Well,
Speaker 1: that was really cool. And Tracy, I feel like you know,
Speaker 1: that was It's pretty fun. Some of the players that
Speaker 1: we've gotten to speak to in this whole story. Yeah,
Speaker 1: I mean definitely the big ones. It's really interesting to
Speaker 1: hear from someone who's actually holding the conversations between various
Speaker 1: stakeholders and trying to here's one thing I was thinking,
Speaker 1: like a lot of this is sort of just changing
Speaker 1: behavior that seems to have become embedded in the industry,
Speaker 1: like sort of changing Appits the idea that you know,
Speaker 1: you just like bring your containers and then you dump
Speaker 1: them at the ports and leave them there for a
Speaker 1: while and it's not really a problem, or the idea
Speaker 1: that you have to send your containers to this one
Speaker 1: port alone rather than thinking about maybe sending them elsewhere.
Speaker 1: Like it feels like a lot of it is just
Speaker 1: sort of breaking habitual behavior. Yeah, that's exactly right. Like
Speaker 1: if it's cheaper to use the port as he described
Speaker 1: it as free storage, because let's say, okay, the warehouse
Speaker 1: capacity inland is you have to get someone to truck
Speaker 1: it to one of those inland warehouses a dred truck,
Speaker 1: Like why not just leave it there as long as
Speaker 1: you possibly can. It's clearly, you know, in a stressed environment,
Speaker 1: it's clearly not optimal. But from a sort of like
Speaker 1: individual actor perspective, like why change anything, And so I
Speaker 1: thought that was like a pretty clear example of this
Speaker 1: is a bottleneck. This is like an inefficiency. This is
Speaker 1: a thing that was done for a while because you
Speaker 1: could just sort of get away with it. But when
Speaker 1: the supply chain system is stressed, this sort of like
Speaker 1: individual micro incentives start breaking down the whole thing totally.
Speaker 1: And I think it's good to get some sort of
Speaker 1: clear metrics that they're looking at in reducing some of
Speaker 1: the gridlock in the system. And I think like that's
Speaker 1: probably where a lot of the criticism has come from.
Speaker 1: People say it's getting better, but we don't necessarily see
Speaker 1: it in certain numbers, or we don't know what numbers
Speaker 1: we're supposed to be looking at. So it's good if
Speaker 1: we can sort of benchmark the progress. Yeah, And I
Speaker 1: hadn't thought about his point before that. It's like, Okay,
Speaker 1: everyone likes to look at the number of vessels that
Speaker 1: are floating out there, but ultimately maybe we should just
Speaker 1: you know, still throughput of actual containers might be the
Speaker 1: best metrics, and we'll have to see if they continue
Speaker 1: to come down. Okay, you can have a few weeks
Speaker 1: of success or some you know, it's easy to imagine
Speaker 1: going from bad practices to mediocre practices and then you
Speaker 1: see some improvement and then the question is can it
Speaker 1: just be sustained? But I I hear his point about
Speaker 1: not all, not all ships floating out there are equal size.
Speaker 1: That was really interesting too, about the sweeper the sweeper
Speaker 1: vessels and improving the flow of containers back, which we
Speaker 1: sort of knew was a problem, but I hadn't actually
Speaker 1: realized that that was being addressed in a specific manner
Speaker 1: as he described. Yeah, definitely interesting to hear his viewpoint.
Speaker 1: I was thinking, we need to get Jean Saroka back
Speaker 1: on as well to talk about the cars. I think that. Yeah,
Speaker 1: well I think stay tuned lots listeners because I think
Speaker 1: that might be in the card soon. So yeah, stay tuned.
Speaker 1: Truly comprehensive coverage of the efforts to improve grid luck
Speaker 1: at America's Sports. Absolutely. Shall we leave it there? Let's
Speaker 1: leave it there, all right? This has been another episode
Speaker 1: of the All Thoughts podcast. I'm Tracy Alloway. You can
Speaker 1: follow me on Twitter at Tracy Alloway and I'm Joe
Speaker 1: Wasn't Though. You can follow me on Twitter at the
Speaker 1: Stalwart Follower or producer Laura carl and she's at Laura M. Carlson.
Speaker 1: Follow the Bloomberg Head of podcasts, Francesca Levi at Francesco Today,
Speaker 1: and check out all of our podcasts at Bloomberg under
Speaker 1: the handle at podcasts. Thanks for listening.