Transportation disruptions come in all manner of destruction; mechanical, weather, labor and capital markets. Savvy logistics providers come away with valuable lessons that will help manage the next service disruption and aid in the design of disruption management strategies. The 7 month West Coast Ports strike exposed capacity and productivity limitations at the ports of Long Beach and Los Angeles.
Long Term Problems
West Coast ports will have to adjust to an increase in Asian imports that involves handling a greater number of containers with increased efficiency. There are serious structural issues that are keeping the ports from reaching their maximum potential. The Port of Los Angeles has an annual operating capacity of 14 million 20-foot equivalent units, but average only 8.5 million. On an average day West Coast longshore labor falls short of productivity levels set by its counterparts elsewhere in the world. This is not entirely a labor problem. Current port infrastructure wasn’t designed to handle the latest generation of megaships and future cargo ship capacity will most certainly increase. Most of today's U.S. Ports cannot accommodate the largest cargo ships due to water depths and clearance issues. One promising option, for importers at least, is the rise of Gulf of Mexico ports. Because of upgraded entrance locks to the Panama Canal, Gulf ports are becoming an increasingly viable option. West coast exporters however have little financially realistic options other than L.A. and Long Beach.
The infrastructure improvements for the west coast ports will be expensive and take years to implement. The problems will be rerouting traffic enough to dredge, shutting down berths and cranes to increase their capacity and clearance and managing the decrease in production caused by all of this. Of course, there's always the question of how to pay for it.
Getting Ready for the Next Big Event
It's critical that shippers have a contingency plan in place for these inevitable supply chain disruptions. It is equally imperative to be able to execute the contingency plan during the first hours of a service interruption. A 3PL could provide valuable guidance and resources in this planning and preparation. The first day of the ltl carriers strike of the 90's was not the time to begin shopping for alternative carriers. The smart shippers had that list of vetted carriers in the backup plan ready to go. In 2014 New Century Transportation, a New Jersey based carrier with a 1300 truck fleet shut its doors with minimal notice other than industry reumblings. Hundreds of unprepared shippers were left scrambling to find carriers to move their mechandise. At today's saturated capacity levels, available equipment will be absorbed very quickly when the next major transportation event occurs. "Chance favors the prepared mind".