Empty shelves, out of stock Amazon orders, soaring prices, we have all experienced these direct effects of the global supply chain crisis in recent months.

However, shortages and rising prices are usually just a symptom of a larger problem that has plagued the industry for much longer. In this case, pandemic closures have plunged the entire chain into chaos, with some ports scaling back operations or shutting down completely in an attempt to reduce transmission of the virus.

“The global economy is out of sync as parts of it were forced to go offline when the pandemic started and it is almost impossible to get everyone in the industry back online at the same time,” he said. former US trade negotiator Harry Broadman told Business Insider.

On top of that, as virus restrictions lift around the world, consumer demand has skyrocketed – leaving the supply chain struggling to keep up.

“The global economy is out of sync because some parts were forced to go offline when the pandemic started and it is almost impossible to get all industry players back online at the same time,” he said. added.

Harry Broadman, former US trade negotiator

“All parts of the supply chain, most of which are built on ‘lean’ principles (no slack, little redundancy, from truck drivers to inventory in warehouses), were unprepared for this increase. “said Tony Pelli, Director of Security & Resiliency Practice at BSI.

“While consumer demand may increase in a matter of months, it takes longer to increase port capacity, build warehouses, hire employees, etc., to meet this demand. “

Meanwhile, shipping costs are skyrocketing because there aren’t enough ships or containers to meet growing demand.

Last week, Moody’s Analytics released a report that said things “are going to get worse before they get better” as we continue to see a myriad of disruptions along the chain. Solving this crisis before the global economy spirals out of control will require many different and innovative approaches.

Ryan Petersen, CEO of Flexport, has a creative approach that could solve one of the biggest bottlenecks in the chain: storage space in container terminals.

Early on October 22, Petersen tweeted at length about what he saw on a 3-hour boat tour of the Long Beach harbor complex – and how he thinks we can ease the traffic jams.

Below is what Petersen saw about what is really going on in our ports, slightly modified. You can read the original thread here.

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Ryan Petersen:

LA / Long Beach ports are at a standstill. During a full 3 hour loop through the port complex, passing through each terminal, we saw less than a dozen containers unloading.

There are hundreds of cranes. I only counted about 7 that even worked and those that seemed to go quite slowly. It seems everyone now agrees that the bottleneck is storage space in container terminals. The terminals are simply overflowing with containers, which means they have no more space to accommodate new containers, whether by ship or by land.

It’s a real traffic jam.

Right now, if you have a chassis (a special trailer used to transport containers) without an empty container, you can pick up containers from any port terminal. However, if you have an empty container on that chassis, they won’t allow you to return it except on a very restricted basis.

If you can’t remove the empty container from the chassis, you don’t have a chassis to go and get the next container. And if no one goes looking for the next container, the port gets blocked.

Ryan petersen

If you can’t remove the empty container from the chassis, you don’t have a chassis to go and get the next container. And if no one goes looking for the next container, the port gets blocked.

With such crowded job sites, carriers and terminals are very restrictive about where and when they will accept an empty container.

In addition, containers are not fungible between carriers, so truckers must drop off their empties at the correct terminal. This causes the accumulation of empty containers. This trucking partner alone has 450 containers on chassis at the moment (as of 10/21) in its yards.

It is a trucking company with 6 sites which represents 153 driver-owners, so it has nearly 3 containers on chassis in its site for each driver of the team.

And with all the containers piling up in the terminal yard, longshoremen cannot unload ships. And so the queue gets longer

Ryan petersen

He cannot remove the containers from the chassis as he is not allowed by the City of Long Beach zoning code to store empty containers over 2 heights in his truck yard. If he breaks this code, they will shut down his garden.

With the chassis fully immobilized to store empty containers that cannot be returned to the port, there is no chassis available to pick up the containers at the port.

And with all the containers piling up in the terminal yard, longshoremen cannot unload ships. And so the queue is growing, with now more than 70 ships containing 500,000 containers waiting offshore. This line will get longer, not shorter.

This is a negative feedback loop that quickly gets out of hand – if it continues unabated, it will destroy the global economy.

This is a negative feedback loop that quickly gets out of hand – if it continues unabated, it will destroy the global economy.

Ryan petersen

Okay, how can we fix this, you ask? Simple. And we can do it quickly now.

When you design an operation, you need to choose your bottleneck. If the bottleneck appears somewhere that you did not choose, you do not perform an operation. He directs you.

You should always choose the most capital-intensive part of the line as the bottleneck. In a port, it’s ship-to-shore cranes. Cranes should never be unable to operate as they are waiting for another part of the operation to catch up.

You should always choose the most capital-intensive part of the line as the bottleneck. In a port, it’s ship-to-shore cranes. The current bottleneck is not the cranes: it is the yard space.

Ryan petersen

The bottleneck right now isn’t the cranes: it’s the storage space in the container terminals and it’s the empty chassis to empty those containers.

In operations, when a bottleneck pops up somewhere you didn’t design it to appear, you need to OVERCOME THE Bottleneck!

Here is a simple plan that President Bident, Governor Newsom and the private sector, labor, truckers and everyone else in the chain must implement TODAY to overcome the bottleneck and create yard spaces in ports.

1) Executive Order, effective immediately, rescinding zoning rules in Long Beach and Los Angeles to allow truck fleets to store up to six empty containers instead of the current limit of two. Make it temporary for about 120 days. This will free tens of thousands of chassis that currently only store containers on wheels. These chassis can be immediately transported to the ports to evacuate the containers. (Editor’s note: since Petersen proposed his plan, the mayor of Long Beach, Robert Garcia has adopted a temporary measure raising this limit to 4 containers).

This is not an exhaustive list. Please add to it. We don’t need to come up with the best ideas. We have to do ALL the ideas.

Ryan petersen

2) Bring all National Guard and Army container chassis anywhere in the United States to ports and loan them to terminals for 180 days.

3) Create a new temporary container yard on large government land (approximately 500+ acres) adjacent to an inland rail terminal within 100 miles of the port complex.

4) Force the railroads to transport all containers to this new site, turn around and come back. There should be no more 1,500 mile train trips to Dallas. We do 100 mile shuttles, turn around and start over. Truckers will go to this site to get containers instead of the port.

5) Bring barges and small container ships and start shipping containers from Long Beach to other smaller ports that are not being backed up.

This is not an exhaustive list. Please add to it. We don’t need to come up with the best ideas. We have to do ALL the ideas.

We need to REMOVE THE bottleneck and get these ports back to work. I cannot stress enough that it is bad for the global economy if the ports are not functioning. Any business selling physical goods bought or sold internationally will fail.

The circulatory system on which our globalized economy depends has collapsed. And thanks to the negative feedback loops involved, it doesn’t get worse with each passing day.

I would be happy to lead this effort for the federal or state government if asked. Leadership is the missing ingredient at this point.



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