High Traffic with Low Efficiency: America’s Port Problems
Bottlenecks, shortages, tariffs, oh my! After recent years of chaotic crises, do companies remain hesitant about returning their regular, pre covid, shipment operations? What continues to drive port precautions and delays? Has it always been this bad?
Many experts say that the issues at the ports have been a crisis in the making for decades. It has only been recently that holes in America’s port systems are being noticed. The pandemic, strikes, and high demand have all played a role in making American ports some of the least efficient in the world.
You read that right, America has been behind in port efficiency even before the pandemic, yet we are one of the busiest. Without going too much (for the sake of redundancy) into how the pandemic has affected the supply chain, there have been multiple factors that have been contributing to bottle necks and slow unloading periods which are not in the spotlight.
Out-dated policies such as the 1920 Jones Act which states:
“Also, known as the Merchant Marine Act of 1920, is a federal statute establishing support for the development and maintenance of a merchant marine in order to support commercial activity and serve as a naval auxiliary in times of war or national emergency (see 46 USC § 50101).”
Which, in English, states that goods transported on water between the U.S. ports need to be on ships that were built in the U.S., owned by the U.S. and crewed by the U.S. originally created to “bolster” the U.S. maritime community by created jobs, raising pay and also protect national security. This has created a multitude of consequences, none of which more burdensome that the rising costs to build the vessels as well goods and inland transportation of those goods.
“As a result of these restrictions, the U.S. economy endures artificially inflated shipping costs because the transport of cargo between U.S. ports and within the country’s vast inland waterways is off‐limits to foreign competition and domestic shipping firms must pay vastly higher prices for the ships they use. Although higher shipping rates are the most obvious cost of the Jones Act, they are merely the first in a cascade of adverse consequences unleashed by the law’s restrictions.” – cato.org
There have been many calls for congress to abolish, or at the least, reform the act, to help increase port efficiency and even help decrease the cost of fuel. As of right now though, it looks like we are stuck with it.
Another variable in our ports’ deficiency is lack of cooperation between companies and unions. As time passes, advancements tend to make jobs easier, including automation. While more ports around the world are utilizing automation, the unions that make up most of the west and east coasts both are vehemently against “job-killing” automation advancements in the ports. There is a fear that incorporating more technology and robotics would lessen the needs for manual labor. Another issue they take up with is pay. Stating that their pay is dramatically less than those that do not have to do such physically demanding jobs in the port. One thing leads to another, and we began to get waves of strikes that end up shutting down already-strained ports.
Companies and ports have started to hire non-union workers where they can as a way to stave off confrontations and keep things moving but the ILA and ILWA are seemingly entrenched that some businesses have their hands tied.
A smaller factor, but equally as glaring, is looking at the hours and shifts that most major ports in the U.S. have. The worlds’ top performing ports not only embrace automation, but also run 24/7 as well as welcome international ships.
Putting just the few observations above into perspective, it makes sense that American ports are in desperate need of reform and restructure. Many believe that since the pandemic has leant a mighty hand in exposing these weaknesses that organizations and governments will make it a priority to better the way things are done now, in order to prepare for what may be ahead.
Is your company ready to take on a transport 3PL or is it a conversation that been put off for a little too long? Call us today to see if Meadow Lark can meet you where you’re at to provide solutions for your growth!