Biden-Backed Port Congestion Plan Not as Profitable as Marketed

Parenting 101 from the Ports of Los Angeles & Lengthy Seaside

On Tuesday, in one more weblog submit concerning the Ports of Los Angeles and Lengthy Seaside suspending the outrageous container dwelling charges they’ve been threatening, I in contrast the threats to a mother counting down her youngsters earlier than they get in hassle. Solely the mother doesn’t actually need to punish her youngsters, so she simply retains restarting the countdown.

In fact, such a tactic inevitably turns into ineffective, as seems to be the case on the Ports of Los Angeles and Lengthy Seaside.

Kids will check their mom and ultimately catch on to the very fact no punishment is coming. Likewise, as I wrote on Tuesday, nobody at this level possible thinks the ports will really assess these insanely excessive charges they’ve been threatening. Hundred-dollar-per-day-per-container charges, rising by 100 {dollars} every day, then cumulatively including collectively? As President Biden would say – if he wasn’t linked to the plan – “Come on, man!”

Sparse Numbers Breed Skepticism

Whereas the ports and White Home have been touting the effectiveness of the plan, I’ve been skeptical at solely listening to a share lower in dwelling containers on the ports with no comparative knowledge. Greg Miller added validation to my skepticism with a data-driven article in American Shipper that exhibits, as his article title says, the plan has stalled. He put it nicer at one level within the article:

[The plan to threaten fees is] already working so much lower than it used to. American Shipper analyzed the entire out there statistics and located that progress in clearing long-dwelling containers has slowed considerably over current weeks.

Let’s assume for the second all discount in long-dwelling containers is totally because of these payment threats. Sure, I’m skeptical of that too. Nevertheless, I acknowledged already in Common Cargo’s Thanksgiving-week-post concerning the charges being postponed once more that whereas correlation doesn’t imply causation, it could be awfully coincidental to say the 2 aren’t associated. That doesn’t imply different elements, just like the heavy vacation importing ought to be over (particularly with so many shippers doing that vacation importing early), don’t contribute to discount of congestion and long-dwelling containers. Nonetheless, let’s assume it’s simply payment threats contributing to diminished long-dwelling containers. Miller’s article makes it clear the congestion discount being offered to us as correlating to those threats isn’t as sturdy as marketed.

The truth is, when he quoted transport advisor Jon Monroe, you’d assume outcomes aren’t taking place in any respect:

“My cash says the brand new port surcharge might by no means be carried out — so long as we proceed to enhance the port congestion. And is that this taking place? NO. However don’t inform anyone. That is finest stored a grimy little secret left uncovered.”

Spinning Numbers

Apparently, Miller couldn’t resist telling individuals, as he bought into the info. He additionally had no downside sharing how simply the info might be spun to look higher than it’s:

In the meantime, share modifications such because the one cited by Seroka are inherently susceptible to spinning. The White Home reviews declines measured in twenty-foot equal items, whereas the ports publicly report declines in containers, no matter measurement. The ports of Lengthy Seaside and Los Angeles report their container numbers in two alternative ways. And any share change is closely skewed by which date vary you choose.

The quoted share and date vary from Seroka is definitely how Miller began his article:

“We’re beginning to see some traction,” Port of Los Angeles Government Director Gene Seroka proclaimed on Bloomberg TV on Tuesday. “These getting older containers are down by 50% over the past six weeks.”

When Miller digs into the numbers a bit greater than giving that one stat Seroka shares, issues don’t look fairly so rosy when it comes to lowering long-dwelling cargo.

Fuller Image on the Port of Lengthy Seaside

The Port of Lengthy Seaside facet appears worse than the Port of Los Angeles when it comes to the info Miller shared:

The Port of Lengthy Seaside gives statistics on the variety of containers that meet these two particular “late” definitions [6 days for cargo leaving by rail and 9 days for cargo leaving by truck]. However the Port of Los Angeles doesn’t.

For Lengthy Seaside, the overwhelming majority of reported late containers are within the nine-days-plus class for trucking, not the six-days-plus class for rail. The full on Monday, 20,772 containers, was really 20% larger than the full three weeks prior, on Nov. 13, of 17,271 containers. Extra-dwell containers represented 35% of whole import containers on the port on Monday, up from 29% on Nov. 13.

Uh oh. That really appears like numbers are going within the mistaken route. Nevertheless, there’s an total lower in long-dwell containers since principally the beginning of when the charges have been presupposed to be carried out. However they stopped reducing. And on a macro degree, there are extra transport containers total on the port than there have been when the charges have been supposed to start:

Trying all the best way again to Nov. 2, 5 weeks in the past, the full variety of extra dwell containers in Lengthy Seaside was down 22% as of Wednesday. But the numbers in Lengthy Seaside have plateaued extra just lately. Moreover, the variety of whole import containers at Lengthy Seaside terminals has not decreased — it has really barely elevated. There have been 57,042 import containers at Lengthy Seaside terminals on Nov. 1 and 57,970 on Tuesday.

It appears the payment threats aren’t fairly the congestion killers they’re telling us they’re.

Port of Los Angeles Higher However Stalled

However let’s soar over to the Port of Los Angeles facet. I did say issues look somewhat higher there from Miller’s knowledge share:

The Port of Los Angeles posts numbers on containers by days dwelling: as much as 4, 5 to eight, 9 to 12, and 13-plus. Stats can be found from Nov. 1. (The Port of Lengthy Seaside has these figures as properly, however solely from Nov. 9.)

The variety of containers in Los Angeles dwelling 9 days or extra is a good approximation of the quantity that will be charged excess-dwell charges if these charges have been ever charged, nevertheless it excludes late rail containers within the six-to-eight-day class.

On Oct. 24, the day earlier than the payment announcement was made, there have been 37,410 containers in Los Angeles dwelling 9 days or longer. The decline over the previous six weeks matches the determine cited by Seroka on Bloomberg.

Not like in Lengthy Seaside, Los Angeles has seen a pointy drop in whole import containers on the port. On Nov. 1, there have been 87,485. On Wednesday, there have been 57,311.

This is good news. Seroka didn’t lie. There’s knowledge to match his assertion and extra knowledge to point out enchancment on a macro degree. Absolutely, Seroka didn’t depart something out, proper Miller? Properly, there’s that complete stalling factor:

Regardless of the drop in whole import containers at Los Angeles terminals, the share of containers dwelling 9 days or extra versus the full was 34% on Wednesday, the identical share as Nov. 21.

So far as the long-dwelling containers focused by the fee-threat plan, progress stalled in Los Angeles round Nov. 23. The numbers over the previous two weeks have plateaued.

What Do You Count on from the White Home?

In the meantime, the White Home is skewing numbers to make issues look higher than they’re on the ports. Miller reviews:

The White Home places out twice-monthly releases on provide chain points, together with stats on containers dwelling 9 days or extra on the ports of Los Angeles and Lengthy Seaside. The White Home reviews the numbers in TEUs, not containers (many of the containers in LA/LB are 40-footers).

On Nov. 29, the White Home reported that the variety of long-dwelling containers within the two ports was 75,000 TEUs, a week-on-week drop of seven% from 81,000 TEUs on Nov. 22.

The ports of Los Angeles and Lengthy Seaside reported a mixed 45,458 containers dwelling 9 days or extra on Nov. 22, and 44,919 on Nov. 29, representing a a lot smaller week-on-week drop of 1%.

7%, 1%, that’s okay. That is nonetheless in all probability essentially the most sincere factor this administration has ever mentioned.