Delays Mount at Local Ports as Shipping Surges

Despite relief efforts, congestion at the ports of Los Angeles and Long Beach is getting worse as the holiday shipping season kicks into high gear.

At any given time in recent weeks, there have been as many as 83 vessels waiting to be unloaded -- an international flotilla of cargo ships bigger than most of the world’s navies.

Moreover, it is taking six to eight days to empty each of those ships, twice as long as when the ports are hosting their normal complement of 35 to 50 vessels.

Although no one is predicting empty shelves, the tie-up could thin the supply of some hot-selling items. And it’s having other, more far-reaching consequences.

Some manufacturers and retailers have changed the way they do business to protect themselves from shipping delays. Truck drivers have quit by the hundreds after waiting as long as seven hours to pick up one load. Railroads serving Southern California are adding thousands of employees.

Other ports and cargo facilities have forged alliances to siphon business from Los Angeles and Long Beach, which combined trail only Hong Kong and Singapore as the world’s busiest seaport. And there’s talk that the local port complex has gotten big enough.

“When this all works, it’s like a dance,” said Patty Senecal, co-owner of trucking firm Transport Express Inc. “Our dance is a mess. Everyone is stepping on everyone else’s toes.”

Through August, nearly 8.5 million cargo containers moved through Los Angeles and Long Beach, which together are busier than the next five U.S. ports combined. That’s a 10.4% increase from the same year-earlier period. In 2003, the ports combined for a record 11.9 million containers.

The current logjam is the worst congestion at the ports since late 2002, when 129 vessels were lined up after a 10-day lockout of dockworkers by the Pacific Maritime Assn., which represents West Coast shipping lines.

The problem could be exacerbated by a Wal-Mart Stores Inc. decision to move more goods through Southern California in September and October than ever before, in part to reduce the amount of time its goods sit idle as inventory. The company, the world’s largest retailer, usually spreads its holiday shipments across several months.

Many retailers say they anticipate no significant problems as a result of the slowdown at the ports, but some are antsy. September and October are crucial months for retailers and manufacturers as they move a bounty of holiday merchandise on ships, trucks and trains.

“From a transportation point of view, Christmas is pretty much over by the end of October,” said Robin Lanier, a transportation consultant for the National Retail Federation, the industry’s largest trade group. “Once you get behind early, it’s very hard to catch up.”

Los Angeles manufacturer Tarrant Apparel Group has been bombarded with questions from retail buyers about the problem, import director Johnny Ku said.

“Every day people ask me about it. There’s a lot of concern,” Ku said, adding that some merchandise already is two weeks late.

If necessary, Tarrant could switch to more expensive air transportation to get potentially hot holiday sellers -- such as crocheted ponchos, striped shirts and trendy jeans -- into stores on time.

“Even if you lose money, you still have to make the commitment,” Ku said. “Once you fly any shipment, you’re losing money.”

O’Neill Clothing also is on edge, waiting for the arrival of its holiday merchandise, including sweat-suit-style track jackets and zip-up sweaters that the sportswear maker expects to be big sellers. Deliveries from the ports are running as much as 12 days behind schedule, said Toby Bost, executive vice president of the Irvine-based company.

“A 10-to-12-day delay is crazy,” he said. “Our retailers can’t wait. They depend on us to absorb the unforeseen delays.”

Ultimately, however, Lanier said she expected that neither retailers nor consumers would feel serious effects from the ports’ delays, partly because businesses had learned to plan ahead for bottlenecks, given the waterway congestion, railway woes and heightened regulations born of Sept. 11.

Harbor and shipping officials are responding to the ports’ problems by extending terminal gate hours to nights and weekends and adding 3,000 dockworkers. But the new hours won’t begin until November, about the same time that the new hires will be fully trained and working.

Until then, one problem seems to compound others. Truckers, for example, typically are paid by the load. Their profit is whatever is left after lease, insurance, gas, registration and maintenance costs. But many truckers have had to wait in line for hours to pick up loads, destroying their ability to earn a living. An informal survey by the Marine Exchange of Southern California, which tracks port movements, found that hundreds of truck drivers had thrown in the towel.

John Jelaco, chief executive of Golden Eagle Express of Santa Fe Springs, said 10% of his 300 trucks were idle because he couldn’t find enough drivers willing to put up with the delays.

“We can’t compensate the drivers for all of this waiting time, and it’s been hard to recoup our own internal costs,” Jelaco said. “This is the worst I have ever seen it.”

Senecal of Transport Express found herself writing a letter to a Fortune 500 client, explaining why it wouldn’t receive its merchandise when it expected.

“As we continue to shrink in drivers, the import volume is peaking. The driver comes to the gate at 7 a.m., can’t get in until 9 a.m. and then they can’t find the container they’re supposed to pick up,” Senecal said.

Blame abounds. Truckers fault the terminal operators for early gate closings and late fees they contend are unreasonable. The International Longshore and Warehouse Union blames the shipping lines and the railroads for waiting too long to hire more dockworkers, locomotive drivers and conductors.

John Bromley, director of public affairs for Union Pacific Corp., had a short answer when asked if the railroad had anticipated the current volume of cargo traffic. “No,” he said.

Union Pacific plans to hire 5,000 employees primarily in the Southwest, add 700 locomotives and 6,500 freight cars by the end of the year, and lay about $225 million in new track, Bromley said.

“We intend to keep the workforce up to a point where we can handle these kind of surges in the future,” he said.

The only other major Southern California railroad, Burlington Northern Santa Fe Corp., is doing much the same, including the laying of a third main line for seven miles near the Cajon Pass, where the railroad has had to share track time with Amtrak and Metrolink.

Throughout the crunch, only about two dozen ships have been diverted to other ports, including Oakland and Manzanillo, Mexico, according to the Marine Exchange.

Hoping to capitalize on the congestion is a new alliance between the Panama Canal Authority and the ports of New York and New Jersey; Norfolk, Va.; Savannah, Ga.; Charleston, S.C.; Miami; New Orleans and Houston. Manzanillo, known more for its swordfish fishing, also could become a competitor.

The local ports’ tie-up is causing angst among neighbors concerned about increasing air pollution and traffic problems, and some experts are even willing to consider the idea that the ports have reached their limits of growth.

“The best solution to the increasing freight coming to L.A. and Long Beach might not be to simply accommodate it but to divert it away,” said Jon Haveman, an economist for the San Francisco-based Public Policy Institute of California. “People will think that is heresy, but [the ports] are now getting sufficiently large that these are issues that need to be investigated more fully.”

Haveman said giant importers such as Wal-Mart and Home Depot Inc. seem to be hedging their bets for the future, investing heavily in distribution centers in the Southeast, near several East Coast ports. That would give them the option of an all-water route from Asia to the East Coast, through the Panama Canal.

But some local port officials believe that the current traffic jam is temporary.

“We are training and hiring 3,000 nonunion workers and have a list of nearly 15,000 more that we can call on, so we’ll never be in that kind of labor shortage situation again,” said Jim McKenna, executive director of the Pacific Maritime Assn. “More growth is possible. We just have to become more efficient.”