Bound to Happen

We just came across a report stating that many in the industry are of the opinion that labor practices are a major reason for throughput disparity throughout U.S. container ports. Although the disparity they speak of cannot be questioned, the rationale behind the “opinion” doesn’t hold water. Well, maybe it does hold water … because that kind of thinking is all wet.

“We just keep on patching and maintaining more of the ageing (ILA and ILWU) gangs who are more concerned with maintaining their sweet jobs and how they can pass them on to the next generation,” said the official of one U.S. shipping agency. A spokesman at an East Coast port, however – in a position closer to the action – credited his port’s high output to a work force of “seasoned professionals,” many of them third – and fourth – generation longshore workers, and an “excellent working relationship” between the ILA local and the terminal operators’ organization.

And from still another vantage point, an official of a shipping line wisely admitted that he was at a loss to explain the throughput gap between U.S. ports and those overseas. The issue is especially critical, he said, at the ports in Los Angeles and Long Beach, the nation’s busiest container ports.

We provided an explanation for this disparity in two earlier commentaries. In Vol. X, Art. 25, we pointed out that China’s throughput flow of 12,000 TEUs per acre annually is directed away from the port … to the wide, wide open seas where there are no supply line constraints. Chinese ports could even double or even triple these numbers if required to do so, we reasoned, because there’s no reason why they couldn’t. There are no impeding restraints in the wide, wide open seas.

U.S. ports, on the other hand, will be stuck with their low, low throughput rates because the flow of imports is inward, and congestion along the entire supply chain is inevitable. Because U.S. ports are maxed out, increasing volumes result in bottlenecks and backups. There are no magic bullets available to this primitive concept. Ports officials have painted themselves into a corner.

In Vol. XII, Art. 39, we noted that Gary Ferrulli saw glaring weaknesses in the performances of U.S. West Coast container terminals. He revealed that, although we’ve been led to believe that rates of 35 to 40 lifts per hour were being achieved, those terminals are recording about 24 lifts per hour. The reason? Congestion. Everything is backed up, Gary pointed out. The bottlenecks which prevent a smooth flow of goods from the ships, through the terminals, and eventually into traffic corridors, originate back in the cramped, congested and inefficient storage, retrieval and delivery operations of our primitive container terminals. Is it any wonder that West Coast crane operators have low productivity numbers?

And it isn’t as though the labor force is being paid minimal wages. Low wages are not the reason for the low throughput. The average pay for full-time ILWU longshoremen last year, in fact, was $ 127,000, and the average pay for marine clerks was $ 145,000, so the issue isn’t labor related. The truth is, more work a longshoreman can turn out, the more money he takes home. No, hard-hatted laborers are not the cause of bottlenecks and low productivity — hard-headed officials are.