Yesterday I rented a boat and took the leader of one of Flexport's partners in Long Beach on a 3 hour of the port complex. Here's a thread about what I learned.
First off, the boat captain said we were the first company to ever rent his boat to tour the port to see how everything was working up close. His usual business is doing memorial services at sea. He said we were a lot more fun than his regular customers.
The ports of LA/Long Beach are at a standstill. In a full 3 hour loop through the port complex, passing every single terminal, we saw less than a dozen containers get unloaded.
There are hundreds of cranes. I counted only ~7 that were even operating and those that were seemed to be going pretty slow.
It seems that everyone now agrees that the bottleneck is yard space at the container terminals. The terminals are simply overflowing with containers, which means they no longer have space to take in new containers either from ships or land. It’s a true traffic jam.
Right now if you have a chassis with no empty container on it, you can go pick up containers at any port terminal. However, if you have an empty container on that chassis, they’re not allowing you to return it except on highly restricted basis.
If you can’t get the empty off the chassis, you don’t have a chassis to go pick up the next container. And if nobody goes to pick up the next container, the port remains jammed.
WIth the yards so full, carriers / terminals are being highly restrictive in where and when they will accept empties.
Also containers are not fungible between carriers, so the truckers have to drop their empty off at the right terminal. This is causing empty containers to pile up. This one trucking partner alone has 450 containers sitting on chassis right now (as of 10/21) at his yards.
This is a trucking company with 6 yards that represents 153 owner operator drivers, so he has almost 3 containers sitting on chassis at his yard for every driver on the team.
He can’t take the containers off the chassis because he’s not allowed by the city of Long Beach zoning code to store empty containers more than 2 high in his truck yard. If he violates this code they’ll shut down his yard altogether.
With the chassis all tied up storing empties that can't be returned to the port, there are no chassis available to pick up containers at the port.
And with all the containers piling up in the terminal yard, the longshoremen can’t unload the ships. And so the queue grows longer, with now over 70 ships containing 500,000 containers are waiting off shore. This line is going to get longer not shorter.
This is a negative feedback loop that is rapidly cycling out of control that if it continues unabated will destroy the global economy.
Alright how do we fix this, you ask? Simple. And we can do it fast now,
When you're designing an operation you must choose your bottleneck. If the bottleneck appears somewhere that you didn't choose it, you aren't running an operation. It's running you.
You should always choose the most capital intensive part of the line to be your bottleneck. In a port that's the ship to shore cranes. The cranes should never be unable to run because they're waiting for another part of the operation to catch up.
The bottleneck right now is not the cranes. It's yard space at the container terminals. And it's empty chassis to come clear those containers out.
In operations when a bottleneck appears somewhere that you didn't design for it to appear, you must OVERWHELM THE BOTTLENECK!
Here's a simple plan that @POTUS and @GavinNewsom partnered with the private sector, labor, truckers, and everyone else in the chain must implement TODAY to overwhelm the bottleneck and create yard space at the ports so we can operate against
1) Executive order effective immediately over riding the zoning rules in Long Beach and Los Angeles to allow truck yards to store empty containers up to six high instead of the current limit of 2. Make it temporary for ~120 days.
This will free up tens of thousands of chassis that right now are just storing containers on wheels. Those chassis can immediately be taken to the ports to haul away the containers
2) Bring every container chassis owned by the national guard and the military anywhere in the US to the ports and loan them to the terminals for 180 days.
3) Create a new temporary container yard at a large (need 500+ acres) piece of government land adjacent to an inland rail head within 100 miles of the port complex.
4) Force the railroads to haul all containers to this new site, turn around and come back. No more 1500 mile train journeys to Dallas. We're doing 100 mile shuttles, turning around and doing it again. Truckers will go to this site to get containers instead of the port.
5) Bring in barges and small container ships and start hauling containers out of long beach to other smaller ports that aren't backed up.
This is not a comprehensive list. Please add to it. We don't need to do the best ideas. We need to do ALL the ideas.
We must OVERWHELM THE BOTTLENECK and get these ports working again. I can't stress enough how bad it is for the world economy if the ports don't work. Every company selling physical goods bought or sold internationally will fail.
The circulatory system our globalized economy depends has collapsed. And thanks to the negative feedback loops involved, it's getting worse not better every day that goes by.
I'd be happy to lead this effort for the federal or state government if asked. Leadership is the missing ingredient at this point.

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More from @typesfast

2 Dec
The decline in ships waiting just offshore of Los Angeles/Long Beach continues to be touted as a sign that port congestion is easing — despite the fact that the true number of waiting ships has not actually declined.

…w-freightwaves-com.cdn.ampproject.org/c/s/www.freigh…
The ports just made the ships wait out at sea to avoid air pollution in LA. The overall queue, including container ships waiting out at sea is larger than ever.
"The total — 94 — was just shy of Monday’s all-time record of 96 (including ships outside the SAQA), and up 27% from the count on Oct. 25."
Read 12 tweets
18 Nov
Global supply chains are a mess. The world's logistics infrastructure has proven incapable of scaling to the demands of a global economy going through more chaotic evolution than ever. 1/
Prices for pretty much all logistics and supply chain services have reached all time highs while service levels and transit times have never been worse. 2/
In hindsight, the signs were there for years. Almost no logistics companies can show you where your freight is in real-time on a map. Most data is exchanged in unstructured email messages with attachments. There are almost no logistics APIs to speak of. 3/
Read 32 tweets
31 Oct
Tomorrow the new fees for not picking up your containers on time at the Ports of LA-Long Beach go into effect. The fees go up by $100 everyday, so by Day 30 charges reach $46,500 per container. 1/n Image
In my tweetstorm last week I called out all the reasons that it was so challenging for importers to find available chassis and get appointments to pick up containers at the port. 2/n
This new 'emergency fee' punishes importers for a problem totally outside their control. Brands need the merchandise for the holidays. They would LOVE to come get those containers. 3/n
Read 12 tweets
28 Oct
What caused all the supply chain bottlenecks? Modern finance with its obsession with "Return on Equity."
To show great ROE almost every CEO stripped their company of all but the bare minimum of assets. Just in time everything. No excess capacity. No strategic reserves. No cash on the balance sheet. Minimal R&D.
We stripped the shock absorbers out of the economy in pursuit of better short term metrics.
Read 23 tweets
20 Oct
Last night Flexport brought a taco truck to the Port of Long Beach as a big thank you to the ILWU laborers there working like crazy to clear this container backlog. A thread on what we learned! /1 ImageImage
First off, they told us that Flexport is the first outside company in the history of the port to send in a food truck as a sign of gratitude. They loved it. /2
During our evening at the port only one truck showed up. The 24/7 gates don't matter if nobody comes to pick up the containers. Big opportunity for companies that can operate their receiving facilities at night and send trucks to the port when there is no line. /3
Read 18 tweets
28 Apr
I wrote a children's book about the ship that got stuck in the Suez Canal. All proceeds will go toward Flexport.org's urgent shipping of supplies to frontline medical workers in India. Order yours here! gum.co/flexport
Big thanks to @paulg for editing the copy and making it more wonderful :)
Also thanks to @alexrkonrad who I'm pretty sure gave me this idea during our interview about the Suez a few weeks ago.
Read 5 tweets

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