‘There’s Not A Miracle Cure’: Port Experts Start Detailing Plans To Ease Supply Chain Disruptions
Port experts have followed President Joe Biden's Wednesday announcement that the Port of Los Angeles would move to 24/7 operations with further solutions, some of which would get commercial real estate more directly involved in solving the problem.
Biden made the announcement Wednesday to address sustained disruptions to the supply chain and backlogs at the port, which, together with the Port of Long Beach, handles 40% of all incoming shipping containers to the U.S. Newly appointed Port Envoy John Porcari and Port of Los Angeles Executive Director Gene Seroka on Thursday shared details on the plan to shift to round-the-clock operations and other potential solutions, including that they are in talks to potentially add sites for shipping containers to be staged away from the ports.
“We’re actively pursuing multiple ideas,” Porcari said during a digital press conference. "One of them are inland pop-up sites that can be used to ground containers on an interim basis on either public or private property. That provides some temporary help while longer-term capacity issues are addressed.”
Porcari called the lack of availability of off-port properties for containers to be prepped an especially weak link in the supply chain in Southern California, though he noted that it isn't a problem that is unique to the region.
Cushman & Wakefield Managing Director Rooney Daschbach told Bisnow that making real headway on the supply chain issues playing out at the ports would require a large amount of additional dock space, and there just isn’t land for that.
“We need more area to put all this stuff so it clears out the ports and the docks themselves, but there’s no way to do that when there’s no land,” Daschbach said.
Daschbach said he spent weeks trying to find 3 acres for a client who needed the space to hold shipping containers before they are ready to be loaded onto ships. The client was willing to pay far more than market rate and still struggled to even find prospective sites.
Late last year, the Port of Long Beach used 49 acres nearby as a staging area for containers with noticeable results. But that solution maxed out the available space and can’t be expanded, Port of Long Beach Executive Director Mario Cordero told Bisnow last month.
The South Bay market has a scarcity of open land for these uses, a factor in the area’s tight industrial market. As of Q3, industrial vacancy in the South Bay remained at 1%, according to a report from JLL.
Daschbach was skeptical about the impact that 24/7 operations would make, saying that there were so many links in the supply chain domestically and globally that focusing on strengthening just this one wasn't enough. Round-the-clock operations went into effect at one terminal at the Port of Long Beach last month.
“There’s not a miracle cure here,” Daschbach said.
Shortages of everything from truckers to shipping containers have contributed to the issue. The move to 24-hour, all-week operations at the ports is one step toward a resolution, but many more will be needed, Seroka said. Discussions about how and when the first Port of LA terminal will make the move to 24/7 operations are ongoing.
“We’re not going to create artificial deadlines or put anybody in a box. What we’re going to do is keep squeezing these efficiencies out, expanding the hours,” Seroka said.
Increasing hours of operations at the ports isn't as easy as flipping a light switch, Porcari said. The process will instead involve identifying the actions needed to lower the barriers to 24/7 operations and then taking actions to remove those barriers.
“The whole supply chain in the United States and globally was creaking along before the pandemic,” Porcari said. “The pandemic laid bare, with its increased volumes and its different buying patterns, a system that really needs to be modified. The way we can do that in the short term, together, is to move toward more 24/7 operations.”
