President Joe Biden said the U.S. is looking to move its supply chain to one that can operate 24 hours a day, seven days a week, starting with the ports in Los Angeles and Long Beach.
"We have some good news: We're going to help speed up the delivery of goods, all across America," Biden said in remarks at the White House on Wednesday.
After weeks of negotiations between cargo owners, labor unions, ports and transportation providers, Biden said the Port of Los Angeles would follow in the Port of Long Beach's footsteps and operate on a 24/7 schedule. He added the new schedule means the port will now be open for 60 extra hours each week, allowing cargo to flow out of the port at a 25% faster pace than during the daytime, and flow into highways at off-peak hours.
"This is a big first step in speeding up the movement of materials and goods through our supply chain. And now we need the rest of the private sector chain to step up as well," Biden said.
Six companies commit to using the extended hours
A 24/7 system is "what most of the leading countries in the world are already operating on now," Biden said. "Except us, until now."
Night shifts, extended gate hours and reservation systems are common options for ports looking to speed cargo flow, but associated fees or the lack of available labor or equipment has at times prevented the operations from gaining momentum in the United States.
The Port of Long Beach announced it was moving to 24/7 operations, starting by maximizing its night gate hours, in September. But weeks after the start of the program, The Wall Street Journal reported utilization remained low.
"We should recognize that it takes effort to ramp up to 24/7 operations," a senior administration official said on a press call Tuesday. "But what we have with this announcement is a very strong signal to the rest of the goods movement chain that these ports are open for business, they’ll operate around the clock. It’s time for the rest of the goods chain to do that."
The White House said six companies had committed to using off-peak hours to move 3,500 containers weekly out of port facilities, according to a fact sheet. In addition, officials said port labor was not a concern, as the International Longshore and Warehouse Union had committed to staffing 24/7 operations.
Cargo owners and carriers commit to use extended hours
|Walmart||"Increase its use of night-time hours significantly and projects they could increase throughput by as much as 50% over the next several weeks."|
|Target||Increase the amount of containers it moves at night by 10% during the next 90 days "to help ease congestion at the ports." The retailer is currently moving about 50% of its containers at night.|
|The Home Depot||"Move up to 10% additional containers per week during the newly available off-peak port hours at the Ports of L.A. and Long Beach."|
|Samsung||"Move nearly 60% more containers out of these ports by operating 24/7 through the next 90 days. 72% of U.S. homes have at least one Samsung product, from appliances to consumer electronics."|
|UPS||"An increased use of 24/7 operations and enhanced data sharing with the ports, which could allow it to move up to 20 percent more containers from the ports."|
|FedEx||"Work to combine an increase in night time hours with changes to trucking and rail use to increase the volume of containers it will move from the ports. Once these changes are in place, they could double the volume of cargo they can move out of the ports at night."|
SOURCE: White House Fact Sheet
The U.S. Chamber of Commerce said in an emailed press release the companies' commitments would "give the ports the financial security to keep these nighttime hours going through the end of the year." In addition, a senior administration official said the pledges "pave the way" for other companies to shift their operating model.
"Now we’re looking to trucking and freight to expand hours as well to help with bottlenecks. Rail freight, in particular, has an important role to play," the senior administration official said.
'It is the same dance at a different time'
Matt Schrap, CEO of the Harbor Trucking Association, said in an email the announcement of 24/7 gate operations remained "light on the details" that mattered to speed port operations.
The corporate commitments to move 3,500 containers each week are but a drop in the bucket compared to the cargo volumes the San Pedro Bay ports are experiencing. August data from the Port of Los Angeles shows roughly 50,000 containers moved through the port in an average week.
In addition, Schrap said "trucks and truckers" are not the problem causing congestion at the ports — chassis are. To help ease congestion and free chassis, Schrap said ports need to dedicate space for empty containers, and container lines need to send "sweeper vessels" to clear out the empty containers.
"If the same restrictions are in place and there is a lack of skilled labor staffing, it is the same dance at just a different time," said Schrap.
"Our goal is not only to get to this immediate bottleneck, but to address the long standing weaknesses in our transportation supply chain that this pandemic has exposed."
President of the United States
The Owner-Operator Independent Drivers Association was also dubious that extending hours would relieve what it said are long-standing issues. Truckers are often restricted by detenion and a lack of parking, OOIDA CEO Todd Spencer said in a statement after Biden's speech. And those issues must be addressed to yield results, Spencer added.
"Most of what we are seeing is not a surprise to our members who have been plagued with dysfunction in the supply chain for decades and it’s not realistic to expect the supply chain will suddenly operate efficiently on a 24/7 schedule when drivers aren’t being fully paid for their time," Spencer said.
The Port of Los Angeles declined to provide further details for this story, but said the port will host Ports Envoy John Porcari for a media briefing on Thursday.
The Biden administration said it is considering what additional actions it can take to improve the experience for drivers and other structural issues in the industry.
"If federal support is needed, I'll direct all appropriate action. If the private sector doesn't step up, we're going to call them out and ask them to act," Biden said. "Our goal is not only to get to this immediate bottleneck, but to address the long standing weaknesses in our transportation supply chain that this pandemic has exposed."
As a shortage of drivers continues to hamper transportation capacity, the administration has been working to speed the rate at which DMVs issue commercial drivers licenses. OOIDA, however, emphasized in a statement the current supply chain issues are not due to a driver shortage.
Officials said an average of 50,000 CDLs and learners permits had been issued each month in 2021, a 60% increase from 2020 issuance rates.
In addition, officials highlighted off-peak gate hours as an incentive for truck drivers looking for a better experience.
"For drivers who are incentivized by the number of turns, the number of roundtrips that they make, 24/7 operations can actually have a very positive economic impact as well," a senior administration official said.
A focus on the nation's supply chains
The public commitments announced Wednesday are the latest in a series of actions taken by the Biden administration to address issues in the U.S. supply chain as disruptions roiled deliveries throughout the pandemic.
Since the start of Biden's administration, the White House has published a 250-page report on the issues with U.S. supply chains, released an executive order targeting consolidation in several freight modes, launched a Supply Chain Disruptions Task Force and appointed a dedicated Ports Envoy to the task force.
"Today’s commitments are a big deal and will go a long way in addressing short-term challenges," a senior administration official said. "But in the long term, we need to invest in our infrastructure to accommodate the increasing number of goods."
For Biden, the need to shift to a 24/7 operating model for supply chains speaks to how the world has shifted since he was vice president in the Obama administration.
"Prior to the crisis, we shared the focus on lean efficient supply chains, leaving no buffer or margin for error when it comes to certain parts arriving just in time," Biden said. "We didn't have a pandemic and other things at the time."
He said the country needs to take a longer-term view on its supply chains — investing in them in such a way where more time is built in, and critical goods can be produced in the U.S.
"Bottom line," Biden said, the country is "seeing the cost of inaction and the pandemic and delays and congestion that affect every American. But it's fully within our capacity to act, to make sure it never happens again."
S.L. Fuller contributed to this story.
Clarification: This story was updated to clarify the 3,500 weekly containers will move during off-peak hours.