We are halfway into 2022 and it feels like everything is finally getting back to “normal” after COVID-19 shut the world down. We have a golden opportunity right now to examine the cracks in the supply chain system that were made glaringly obvious over the past few years.
The Port Performance Index for 2021 was recently released with the ports of Los Angeles and Long Beach dead last on the list. These two ports are responsible for moving 42% of consumer goods from Asia into the United States. There’s a cascade of cause and effect that ripples out across the industry. Just looking at the connection between trucking jobs and wharehouse space, you’ll see how one problem conflates the other. For example, there’s a shortage of high skilled workers in the trucking industry to effeciently move goods across the country. That means goods must sit in a warehouse at the ports for longer than importers anticipated. Having said that, There’s also a shortage of warehouse space at various port facilities. This then puts pressure on the trucking industry to move goods faster, which they can’t do becuase there is a shortage of high skilled workers.
To keep our economy growing, we have to solve the effeciency issues at our ports with investments in human resources and technology.
New era, new careers:
By the end of the decade, the baby boomer generation will all have hit retirement age. We hear a lot about “The Great Resignation” and that “no one wants to work anymore.” When we put our personal opinions on this aside and look at what’s actually happening in the marketplace, there is a cultural shift happening – younger generations wants different things out of their careers than older generations of workers.
Back in 2017, 80,000 people applied for 2,400 new jobs at the Los Angeles and Long Beach ports. These are your quintessential blue collar union jobs that have historically provided access to the middle class. For the older generations, that meant pensions and home ownership, as well as, good health insurance benefits. Younger generations increasingly want more flexibility and greater work-life balance. Additionally, the more technology we add into our infrastructure, the more skilled our workers need to be. Investing in education and training will ensure new hires have the skills they need to sustain a life long career in logistics. Innovation can’t be just about infrastructure and technology or the human capital will continue to lag behind.
Efficient Modernization
We also need to be spending money on infrastructure upgrades and technological developments with an eye towards improvements in efficiency. For example, warehouse space needs to be expanded and updated, so that ports can better accommodate the influx of goods.
Here on this blog we recently talked about how drone technology is being deployed in logistics and the efficiency benefits that can provide. However, we do need to take a holistic approach in this. In 2021, President Joe Biden advocated for ports implementing a 24-hour operation model, which is in line with the rest of the world. But if the trucking industry can’t match that level of output to get goods on the road, 24 X 7 operations is not the quick fix to solve the problem.
Furthermore, we need to have a larger conversation as a country about the state of our infrastructure, a conversation by the way that has been going on for years with no real solutions. Now might be the best time to seriously think about investing in things like high speed rail, bridge and highway improvements. Just this week, Yellowstone Park was closed, perhaps indefinitely, after severe flooding destroyed the northern portion of the highway system into the park. Our aging infrastructure will also face increasing pressure from a changing climate.
So in conclusion, the Port Performance Index has shown that the United States is in danger of falling behind the rest of the world in terms of modern and efficient Port infrastructure. Catching up of course is not impossible but we must act and act soon or continue to lag behind the rest of the world.
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