Golden State ports digging out of a hole

The three California port directors who faced the wrath of shippers at the annual meeting of the Agriculture Transportation Coalition (AgTC) in San Francisco late last June, surprised many with their candor and heartfelt mea culpas. Even AgTC director, Peter Friedmann, acknowledged that the trio from Los Angeles, Long Beach and Oakland represented the “best and brightest” of the nation’s seaport leaders…and praised them for their courage. 

But it will take more than heroic hearts to prevail over the ongoing crisis of congestion at these Pacific Rim ocean cargo gateways. The sight of several fully-loaded container ships sitting idle in San Francisco Bay this summer makes that fact all too apparent.

Oakland’s capable chief, Chris Lytle, explained that lack of longshore labor was partly to blame, and he assured ag shippers that 400 more “casual” workers would soon be added to the payroll – as indeed they were. Additional hires will be phased into the workforce through September in an effort to accelerate cargo operations and clear out a backlog of vessels. Meanwhile, terminal operators have pledged to provide ongoing training for the more skilled dockside positions.

Prior to taking the helm at Oakland, Lytle was in charge at the Port of Long Beach, and before that had extensive experience with the French-based shipping line CMA CGM – impressive industry credentials by any measure.

Down South, the congestion problems may be more complicated, said Gene Seroka, executive director of the Port of Los Angeles. Indeed, he declared that “the supply chain is broken – and has been for some time.”

But, he too, believes that a dysfunctional situation can be fixed by throwing more resources into the fray. Investment in a new near-dock rail facility, for example, may address the current miasma created by having 11 different companies operating 13 distinct terminals by deploying 9 different operating systems. Mega-port counterparts in Rotterdam or Singapore would be appalled by such a situation.

Seroka was a top executive at American Presidents Lines before getting into the port directorship dodge, so his understanding of ocean carrier imperatives is a given.

At the same time, the Port of LA is addressing the drayage problems by exploring the possibility of equipping trucks with satellite tracking for an “Uber Model” that would use on-demand drivers. Once that is achieved, Seroka added, the port could institute an algorithmic platform to oversee a match-making system for the first available motor carrier to snatch up the first available box.

Jon Slangerup, chief executive officer with the Port of Long Beach, acknowledged that the port will have to do much more in the future than collect terminal rent and invest in infrastructure. “We need to facilitate change across the entire supply chain,” he said.

Slangerup noted that Long Beach has undertaken a sweeping optimization initiative that involves rethinking the supply chain from end-to-end since he took over in July, 2014. 

With more than 30 years of corporate leadership experience, Slangerup has served the past two decades as a president, CEO and/or director of both public and private companies, having built businesses ranging from technology startups to a billion-dollar subsidiary of FedEx Corporation.

“We’re bringing all stakeholders together around the table,” he declared, (suggesting perhaps, that less visionary port authorities are missing this gambit).

But analysts at Boston Consulting Group suggest in a recent report that it may be too late to repair all the damage done by disruptions caused by disenfranchised truckers and longshore labor. Major Ag shippers and many other BCOs (Beneficial Cargo Owners) have reconfigured their supply chains to place less reliance on Pacific Rim transit.

Furthermore, the brain trust charged with restoring West Coast port dominance are all past the midway point in their distinguished careers, and yet may be facing increasingly complex challenges for the remainder of their tenures.

Amid the frenzy of channel and harbor deepening now taking place in the U.S. Gulf and East Coast in anticipation of the 2016 Panama Canal expansion, the begging question facing this chosen triumvarite is whether they can dig themselves out of a hole.