Surgere CEO Bill Wappler appeared on Bloomberg television’s Balance of Power on November 8 to discuss the global supply chain slow down. Bill mentioned an upcoming contract issue with union longshore workers at Los Angeles and Long Beach ports that could add a new wrinkle to the supply chain headache.
We hope to offer a brief and thoughtful view of this issue.
The ports of Los Angeles and Long Beach are the first and second busiest container ports in the United States.
In simple terms, arriving containers need a place to go, either on to a truck or a train destined for a warehouse or to a final retail destination. Dockworkers move products from arriving ships and ideally directly onto trucks or trains. This isn’t as easy as loading a car. This short video, “Gate to Gate,” from the Port of Los Angeles, shows the process of transporting containers via truck transport. If there are no trucks to pick up the containers, the containers stack up.
Bill Wappler, in his interview, explained containers once three high are now twice as high, making it more challenging to store and move containers when trucks do arrive.
Long haul trucking involves long hours and hard work. This leads to the next stress in the supply chain, the long-haul truck driver shortage. According to the American Trucking Association (ATA), the U.S. is short 80,000 licensed and trained drivers. ATA also reports that the industry suffers a 90% burnout rate.
People will always be the most important part of the supply chain, and the current crisis at our nation’s ports proves the point. However, cargo delays are not a new problem to the pandemic. A potential new supply chain issue is with the International Longshore and Warehouse Union (ILWU). In May 2021, Total Terminal International (TTI), the company that operates the ports in California, announced its decision to automate its 385-acre Pier T terminal in Long Beach. In response, ILWU is crying foul. According to an article posted by the International Longshoremen’s Association, “The union opposes the project on the grounds it will eliminate some dockworker jobs, but employers say automation is needed to increase capacity and keep the ports of Long Beach and Los Angeles competitive.”
The current ILWU collective bargaining contract is up for review in July 2022. The union made concessions in 2008 to allow for some level of automation at the ports. However, as ILWU sees increased automation as a threat, the potential for a work slowdown or strike could cripple the ports.
Bill Wappler and other supply chain experts and watchers forecast the current supply chain jam to continue into the 3rd quarter of 2022 – running right through ILWU negotiations. A worker’s strike would add a new headache at a time when we hoped to see an easing of container congestion.
We will be watching these ongoing developments.