1 00:00:10,880 --> 00:00:15,080 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:15,160 --> 00:00:20,880 Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. Tracy, it seems 3 00:00:20,960 --> 00:00:24,960 Speaker 1: like there are some tentative signs out there of easing 4 00:00:25,400 --> 00:00:29,200 Speaker 1: global supply chains, yes, and no, I keep seeing a 5 00:00:29,240 --> 00:00:31,680 Speaker 1: mixed bag. And also, I mean we kind of have 6 00:00:31,760 --> 00:00:33,720 Speaker 1: to talk in terms of geographies as well. So I know, 7 00:00:33,760 --> 00:00:36,800 Speaker 1: Bloomberg Economics literally just hit the button on a piece 8 00:00:36,840 --> 00:00:39,479 Speaker 1: of research saying that there seemed to be some signs 9 00:00:39,520 --> 00:00:42,440 Speaker 1: of improvement in the US and Europe, but in places 10 00:00:42,479 --> 00:00:45,320 Speaker 1: like the UK, things are just getting worse. But of 11 00:00:45,360 --> 00:00:48,360 Speaker 1: course even in the US, there's a lot of debate 12 00:00:48,640 --> 00:00:51,440 Speaker 1: over what exactly it is we're seeing and what we 13 00:00:51,479 --> 00:00:54,800 Speaker 1: should be looking at in terms of judging whether or 14 00:00:54,840 --> 00:00:58,160 Speaker 1: not things are actually getting better. Right, There is not 15 00:00:58,280 --> 00:01:02,720 Speaker 1: like one supply chain index, or one measure of prices 16 00:01:02,840 --> 00:01:05,520 Speaker 1: or one measure of shipping time that can give us 17 00:01:05,520 --> 00:01:08,520 Speaker 1: the answer. There's clearly a lot of different moving parts 18 00:01:08,520 --> 00:01:11,560 Speaker 1: to all this, and so at this point, I think 19 00:01:12,040 --> 00:01:15,160 Speaker 1: maybe it's safe to say things aren't still getting worse, 20 00:01:15,440 --> 00:01:18,920 Speaker 1: I think generally speaking with at least in the US, 21 00:01:18,920 --> 00:01:23,120 Speaker 1: but whether things are like sustainably getting better. Whether packages 22 00:01:23,200 --> 00:01:26,919 Speaker 1: and containers are moving through our system faster still feels 23 00:01:26,959 --> 00:01:31,320 Speaker 1: kind of ambiguous. Yeah, I think that's right. And of 24 00:01:31,319 --> 00:01:35,320 Speaker 1: course we recently spoke with the white Houses Envoy to 25 00:01:35,440 --> 00:01:39,640 Speaker 1: the Ports, John Porcari, and the White House itself has 26 00:01:39,680 --> 00:01:42,000 Speaker 1: been putting out some blog posts and some stats saying, 27 00:01:42,000 --> 00:01:44,520 Speaker 1: look at this improvement, and then other pieces of data 28 00:01:44,680 --> 00:01:48,280 Speaker 1: say that that improvement is a mirage. So yeah, I 29 00:01:48,320 --> 00:01:51,680 Speaker 1: think we're sort of established, just a lot of questions 30 00:01:51,720 --> 00:01:54,520 Speaker 1: still out there. I think that's right. And also when 31 00:01:54,560 --> 00:01:56,680 Speaker 1: we spoke to Porky, we said we were going to 32 00:01:56,760 --> 00:01:59,080 Speaker 1: have to check in on the other side of all 33 00:01:59,080 --> 00:02:01,600 Speaker 1: of this, which is with the actual Port of Los 34 00:02:01,600 --> 00:02:04,720 Speaker 1: Angeles that the White House the Biden administration has been 35 00:02:04,760 --> 00:02:07,440 Speaker 1: working with and see how things are actually going from 36 00:02:07,440 --> 00:02:10,800 Speaker 1: their perspective. Well, that is what we're doing today, and 37 00:02:10,840 --> 00:02:14,400 Speaker 1: so I'm very delighted we spoke to him back over 38 00:02:14,440 --> 00:02:17,160 Speaker 1: the summer. We're going to be speaking again for an 39 00:02:17,240 --> 00:02:20,000 Speaker 1: update on the situation at the part of Los Angeles. 40 00:02:20,120 --> 00:02:23,000 Speaker 1: Jeans Saroka, the executive director at the Port of Los Angeles, 41 00:02:23,240 --> 00:02:25,800 Speaker 1: thank you so much for coming on. Odd Loves, good 42 00:02:25,800 --> 00:02:28,480 Speaker 1: to be here. Joe and Tracy, Thank you, thank you 43 00:02:28,520 --> 00:02:30,760 Speaker 1: so much. So what don't you just uh, you know, 44 00:02:30,840 --> 00:02:33,800 Speaker 1: give us the sort of very big picture how things 45 00:02:33,840 --> 00:02:37,320 Speaker 1: look today. We're recording this December. Are the last time 46 00:02:37,360 --> 00:02:39,400 Speaker 1: we had you on it was early August? Why do 47 00:02:39,520 --> 00:02:41,680 Speaker 1: you give us a little bit of a comparison between 48 00:02:41,760 --> 00:02:44,760 Speaker 1: what's going on right now and then, Well, if we 49 00:02:44,880 --> 00:02:49,440 Speaker 1: talked back in the summertime, late summer and folks told 50 00:02:49,480 --> 00:02:53,239 Speaker 1: me that we would be nearing and surpassing the all 51 00:02:53,320 --> 00:02:57,560 Speaker 1: time record for holiday sales according to the National Retail Federation, 52 00:02:57,880 --> 00:03:01,799 Speaker 1: and had a chance to all also simultaneously break the 53 00:03:01,840 --> 00:03:04,600 Speaker 1: all time record for retail sales in the country. I 54 00:03:04,600 --> 00:03:06,760 Speaker 1: think there'd be a lot of skeptics, led by me, 55 00:03:07,400 --> 00:03:11,160 Speaker 1: but that appears to be where we're headed right now. Now. 56 00:03:11,200 --> 00:03:13,560 Speaker 1: Behind that, there are a lot of There are a 57 00:03:13,639 --> 00:03:18,000 Speaker 1: lot of storylines, There are nuanced effects, there are so 58 00:03:18,240 --> 00:03:22,079 Speaker 1: many variables in each equation. There's a lot to unwrap 59 00:03:22,160 --> 00:03:25,320 Speaker 1: here on today's podcast. But happy to be with you both. 60 00:03:25,919 --> 00:03:29,480 Speaker 1: So what is it that you're watching now in terms 61 00:03:29,639 --> 00:03:34,000 Speaker 1: of actually judging how much you're moving through the port 62 00:03:34,080 --> 00:03:37,080 Speaker 1: Because we have this conversation with port Kari. A little 63 00:03:37,120 --> 00:03:40,000 Speaker 1: while ago, we were talking, for instance, about the number 64 00:03:40,040 --> 00:03:42,680 Speaker 1: of ships that are waiting off the coast, and he 65 00:03:42,800 --> 00:03:45,400 Speaker 1: was emphasizing that we should all be looking at throughput 66 00:03:45,640 --> 00:03:48,720 Speaker 1: and the number of actual containers that are moving through 67 00:03:48,720 --> 00:03:52,560 Speaker 1: the port. So from that perspective, how are things going? Sure, 68 00:03:52,600 --> 00:03:56,520 Speaker 1: I think we've gained some traction in a number of areas, 69 00:03:56,560 --> 00:03:59,120 Speaker 1: but in all sincerity, it's like a game of whack 70 00:03:59,160 --> 00:04:02,000 Speaker 1: a mole. You do a couple of things pretty well 71 00:04:02,080 --> 00:04:04,920 Speaker 1: as a supply chain, and no one individual or no 72 00:04:05,000 --> 00:04:08,040 Speaker 1: one entity is pulling every level, as you both well know. 73 00:04:08,720 --> 00:04:11,680 Speaker 1: But soon as something gets a little bit more traction 74 00:04:11,800 --> 00:04:14,320 Speaker 1: or on better footing, something else jumps up and you 75 00:04:14,400 --> 00:04:17,360 Speaker 1: have to approach it right away too. So looking at 76 00:04:17,440 --> 00:04:20,000 Speaker 1: what we have been doing, I'll give you a couple 77 00:04:20,000 --> 00:04:24,520 Speaker 1: of indicators. One, the number of idle containers sitting on 78 00:04:24,560 --> 00:04:31,080 Speaker 1: the ports marine terminals has decreased by six since October, 79 00:04:31,839 --> 00:04:34,440 Speaker 1: and that's when we first started discussing with the industry 80 00:04:34,720 --> 00:04:38,880 Speaker 1: the potential of levying a penalty for the aging containers 81 00:04:38,880 --> 00:04:43,880 Speaker 1: sitting on our docks. Second, the ongoing productivity at the 82 00:04:43,920 --> 00:04:48,880 Speaker 1: ship level continues at record pace. We're welcoming more vessels 83 00:04:48,880 --> 00:04:51,200 Speaker 1: that are worked every day at the Port of Los 84 00:04:51,200 --> 00:04:55,120 Speaker 1: Angeles than ever before and on average fifty better than 85 00:04:55,120 --> 00:04:58,679 Speaker 1: when the surge began. And the other piece to this 86 00:04:58,920 --> 00:05:01,680 Speaker 1: is that we're already to see those signs on the 87 00:05:01,720 --> 00:05:05,039 Speaker 1: macro economic level of the u S that are so encouraging, 88 00:05:05,240 --> 00:05:09,719 Speaker 1: including the statements by the National Retail Federation overall inventories 89 00:05:09,760 --> 00:05:13,719 Speaker 1: at the warehouse level nationwide and the in store or 90 00:05:13,760 --> 00:05:17,719 Speaker 1: in stock shelf where inventories at the retail level that 91 00:05:17,760 --> 00:05:20,520 Speaker 1: are just about a percentage point below where there were 92 00:05:20,560 --> 00:05:24,320 Speaker 1: a year ago. Let's talk about the ships that are 93 00:05:24,400 --> 00:05:27,600 Speaker 1: docked out, because some have said, well, sure you can 94 00:05:27,720 --> 00:05:32,120 Speaker 1: decrease the number of containers that are aging waiting for 95 00:05:32,320 --> 00:05:35,720 Speaker 1: their simply by uh, just having them beyond the ships, 96 00:05:35,760 --> 00:05:39,240 Speaker 1: and that ultimately it doesn't really change much the number 97 00:05:39,240 --> 00:05:41,680 Speaker 1: of ships at least up the latest stats that I've seen, 98 00:05:41,760 --> 00:05:44,520 Speaker 1: or at least up until recently, have gone up. What 99 00:05:44,800 --> 00:05:47,799 Speaker 1: is going on with that? And is there some sort 100 00:05:47,800 --> 00:05:51,320 Speaker 1: of Is there some sort of mirage here where those containers, 101 00:05:51,520 --> 00:05:55,599 Speaker 1: instead of aging on dry land, are aging out on 102 00:05:55,640 --> 00:05:58,919 Speaker 1: a boat. Yeah, one, I would say no mirage. But 103 00:05:59,120 --> 00:06:02,680 Speaker 1: here again, oh, this is really nuanced, and I'll try 104 00:06:02,720 --> 00:06:05,520 Speaker 1: to carry it through where we were, what we look 105 00:06:05,560 --> 00:06:08,000 Speaker 1: like today, and where we're going in the future. Uh. 106 00:06:08,160 --> 00:06:12,000 Speaker 1: Much of the dialogue around the ports, and again this 107 00:06:12,080 --> 00:06:14,480 Speaker 1: is a global supply chain, but around the ports has 108 00:06:14,480 --> 00:06:17,320 Speaker 1: been how many ships do you have sitting outside at 109 00:06:17,360 --> 00:06:21,360 Speaker 1: what we call anchor? So we dutifully measured and reported 110 00:06:21,400 --> 00:06:23,920 Speaker 1: on that daily, as you both well know, on our 111 00:06:24,000 --> 00:06:27,040 Speaker 1: hero slide of our homepage at the Port of Los 112 00:06:27,040 --> 00:06:30,400 Speaker 1: Angeles are a litany of statistics that we look at 113 00:06:30,440 --> 00:06:33,920 Speaker 1: every day, including major ones that have drawn the attention 114 00:06:33,960 --> 00:06:39,599 Speaker 1: of observers and industry partners alike, especially those vessels and anchor. 115 00:06:39,960 --> 00:06:44,600 Speaker 1: And then recently, as of the sixteenth of November, the 116 00:06:44,760 --> 00:06:49,320 Speaker 1: private sector industry folks decided to put a new process 117 00:06:49,320 --> 00:06:52,599 Speaker 1: in place when it comes to the liner shipping vessels 118 00:06:52,640 --> 00:06:55,960 Speaker 1: that come our way every day. So I'll explain this 119 00:06:56,040 --> 00:06:58,400 Speaker 1: in two pieces. Where we were and where we are 120 00:06:58,560 --> 00:07:01,120 Speaker 1: right now. We look dad and we show on our 121 00:07:01,160 --> 00:07:05,760 Speaker 1: operations report every morning after our own nine hundred staff 122 00:07:05,880 --> 00:07:08,440 Speaker 1: meeting here at the Port of Los Angeles, how many 123 00:07:08,480 --> 00:07:10,960 Speaker 1: ships are in, how many ships are at anchor, what's 124 00:07:11,000 --> 00:07:13,320 Speaker 1: on their way over the next three days. And that 125 00:07:13,440 --> 00:07:16,880 Speaker 1: had been fairly traditional, so everybody could keep up with 126 00:07:16,920 --> 00:07:21,760 Speaker 1: what's happening. On November six, the industry went to what 127 00:07:21,800 --> 00:07:25,160 Speaker 1: they call a queuing system, and what they were trying 128 00:07:25,160 --> 00:07:28,560 Speaker 1: to do was get after three areas that were problematic. 129 00:07:28,840 --> 00:07:31,800 Speaker 1: Number One, pollution in and around our residential areas of 130 00:07:31,840 --> 00:07:34,640 Speaker 1: the ports. With all these ships stacked up for an 131 00:07:34,640 --> 00:07:37,840 Speaker 1: elongated period of time waiting to come into the ports, 132 00:07:38,040 --> 00:07:41,120 Speaker 1: there was more pollution that had to be dealt with. 133 00:07:41,640 --> 00:07:45,160 Speaker 1: Second was the safety of our crews and the vessel 134 00:07:45,240 --> 00:07:48,680 Speaker 1: assets because they were coming over here sitting outside the 135 00:07:48,680 --> 00:07:52,240 Speaker 1: breakwater very close to each other. We've experienced some high 136 00:07:52,240 --> 00:07:55,880 Speaker 1: wind events recently that got the ships moving in the 137 00:07:55,920 --> 00:07:58,840 Speaker 1: ocean going seas a little bit closer to each other 138 00:07:58,880 --> 00:08:01,200 Speaker 1: than we would have liked. In fact, there was a 139 00:08:01,240 --> 00:08:04,400 Speaker 1: lot of us that were really concerned about that. And 140 00:08:04,440 --> 00:08:08,520 Speaker 1: then thirdly, the reason they were rushing over and sitting 141 00:08:08,640 --> 00:08:11,800 Speaker 1: at anchor was because that was the protocol for putting 142 00:08:11,800 --> 00:08:14,400 Speaker 1: in the requests for the dock workers, making sure we 143 00:08:14,440 --> 00:08:17,200 Speaker 1: had enough folks on the job to work each one 144 00:08:17,240 --> 00:08:21,640 Speaker 1: of those individual vessels. So the industry decided to do this. 145 00:08:22,280 --> 00:08:24,960 Speaker 1: You were allowed to put in your requests or orders 146 00:08:25,000 --> 00:08:28,560 Speaker 1: for dock workers as you left Asia Therefore, you didn't 147 00:08:28,560 --> 00:08:32,120 Speaker 1: have to race across the Pacific simply just to get 148 00:08:32,160 --> 00:08:35,640 Speaker 1: in line. You were allowed to stay a little bit 149 00:08:35,679 --> 00:08:39,640 Speaker 1: further out, as agreed upon for industry protocol, and let's 150 00:08:39,679 --> 00:08:43,880 Speaker 1: call it a hundred and fifty miles offshore. In that setting, 151 00:08:44,160 --> 00:08:46,760 Speaker 1: you could sit farther apart from each other if you 152 00:08:46,840 --> 00:08:51,360 Speaker 1: had to, and de risk that potential for collision in 153 00:08:51,400 --> 00:08:56,000 Speaker 1: a high wind event. Thirdly, it moves all those emissions 154 00:08:56,080 --> 00:08:59,920 Speaker 1: farther offshore and nowhere near the proximity of the res 155 00:09:00,000 --> 00:09:04,000 Speaker 1: sidential areas here in Los Angeles and Long Beach. So 156 00:09:04,160 --> 00:09:07,920 Speaker 1: that was the backstory to all this. Now, because we're 157 00:09:07,920 --> 00:09:11,200 Speaker 1: the folks that are looked to for transparency and the 158 00:09:11,280 --> 00:09:14,640 Speaker 1: posting of all these numbers and information, we had to 159 00:09:14,679 --> 00:09:18,480 Speaker 1: get to work to re calibrate along with industry, how 160 00:09:18,480 --> 00:09:22,240 Speaker 1: we would report out and create an apples to apples 161 00:09:22,320 --> 00:09:25,360 Speaker 1: comparison of what we would have looked so today, as 162 00:09:25,400 --> 00:09:28,800 Speaker 1: an example, outside of the waters of the ports of 163 00:09:28,800 --> 00:09:32,440 Speaker 1: Los Angeles and Long Beach, under this new definition, we 164 00:09:32,520 --> 00:09:35,240 Speaker 1: have ninety four ships that are waiting to come into 165 00:09:35,320 --> 00:09:38,040 Speaker 1: the port to do their work if we use that 166 00:09:38,120 --> 00:09:42,440 Speaker 1: same Definitioning back on November six, we would have had 167 00:09:42,440 --> 00:09:46,320 Speaker 1: eighty nine ships sitting waiting to come into port. Most 168 00:09:46,360 --> 00:09:49,160 Speaker 1: of us in the industry call that anchorage. At the 169 00:09:49,200 --> 00:09:52,400 Speaker 1: Port of Los Angeles, specifically, we have forty three ships 170 00:09:52,440 --> 00:09:55,120 Speaker 1: that fall into that category of waiting to come in 171 00:09:55,160 --> 00:09:58,000 Speaker 1: to do their work, and if we use that same 172 00:09:58,040 --> 00:10:01,199 Speaker 1: definitioning back on November sixt that would have been forty four. 173 00:10:01,480 --> 00:10:05,440 Speaker 1: So again, the comparison of the definition was really important 174 00:10:05,440 --> 00:10:08,239 Speaker 1: to get out to the public, to the media community 175 00:10:08,240 --> 00:10:12,400 Speaker 1: and others, and we look pretty similar on those two 176 00:10:12,440 --> 00:10:15,839 Speaker 1: specific dates based on what the private sector industry has 177 00:10:15,880 --> 00:10:34,599 Speaker 1: brought forward as a new process. So I wanted to 178 00:10:34,640 --> 00:10:37,720 Speaker 1: go back to something you said earlier about the number 179 00:10:37,760 --> 00:10:41,520 Speaker 1: of containers that are, you know, sitting at the ports 180 00:10:41,640 --> 00:10:45,440 Speaker 1: waiting to be loaded onto trucks or rail I think 181 00:10:45,440 --> 00:10:48,280 Speaker 1: you said that that number is down something like six, 182 00:10:49,200 --> 00:10:51,640 Speaker 1: was that right? That's correct, And those are the containers 183 00:10:51,679 --> 00:10:55,840 Speaker 1: that we defined as sitting at the port nine days 184 00:10:55,880 --> 00:11:00,800 Speaker 1: and longer back on October. So one of the reasons, 185 00:11:00,880 --> 00:11:02,800 Speaker 1: or the big reason those are down is because you 186 00:11:02,840 --> 00:11:06,760 Speaker 1: have threatened to impose this charge, this one fee on 187 00:11:06,840 --> 00:11:09,640 Speaker 1: containers that are either stuck there I think for for 188 00:11:09,720 --> 00:11:13,240 Speaker 1: nine days or in some cases it's six days or more. 189 00:11:13,679 --> 00:11:18,520 Speaker 1: My question is, why not just start imposing that fee, 190 00:11:18,720 --> 00:11:20,959 Speaker 1: Why just have the threat of it. I mean, I 191 00:11:21,240 --> 00:11:24,880 Speaker 1: get that you've achieved a pretty dramatic reduction with just 192 00:11:24,960 --> 00:11:27,000 Speaker 1: the threat, but at some point you need to sort 193 00:11:27,000 --> 00:11:32,640 Speaker 1: of follow through on what you're saying potentially, And that's 194 00:11:32,679 --> 00:11:36,880 Speaker 1: why the ability to charge this fee has been under 195 00:11:37,040 --> 00:11:41,080 Speaker 1: my authority and will be so until the end of January. 196 00:11:41,120 --> 00:11:44,400 Speaker 1: But we have kept the fee in suspension because we've 197 00:11:44,400 --> 00:11:48,560 Speaker 1: seen progress in the industry. If you go back to 198 00:11:48,640 --> 00:11:52,599 Speaker 1: our Emergency Harbor Commission meeting back at the end of October, 199 00:11:53,040 --> 00:11:56,480 Speaker 1: I told our Board of Harbor Commissioners that I hope 200 00:11:56,480 --> 00:11:59,440 Speaker 1: this is a miserable failure. That would mean quite simply 201 00:11:59,720 --> 00:12:02,720 Speaker 1: that removing cargo and we would not collect any money. 202 00:12:02,760 --> 00:12:05,520 Speaker 1: To date, we have not collected any money, and we've 203 00:12:05,520 --> 00:12:09,840 Speaker 1: seen a decrease in those aging containers because everybody pulled together. Now, 204 00:12:10,000 --> 00:12:12,800 Speaker 1: obviously there was a financial interest in this. People did 205 00:12:12,800 --> 00:12:15,920 Speaker 1: not want to get penalized. People did not want to 206 00:12:16,040 --> 00:12:21,559 Speaker 1: see a problematic situation get worse. At the same time, 207 00:12:21,679 --> 00:12:25,679 Speaker 1: we were able to use this fee to also segment cargo, 208 00:12:26,200 --> 00:12:28,880 Speaker 1: and there was admittedly cargo on our docks that was 209 00:12:28,920 --> 00:12:32,439 Speaker 1: not needed right now at that snapshot in time, nor 210 00:12:32,559 --> 00:12:34,720 Speaker 1: is it today. It may have been a little late 211 00:12:34,840 --> 00:12:38,000 Speaker 1: as seasonal product that had already moved past its market. 212 00:12:38,320 --> 00:12:40,960 Speaker 1: It may be a little early for next spring. And 213 00:12:41,000 --> 00:12:43,400 Speaker 1: we were able to figure this out through the data 214 00:12:43,440 --> 00:12:47,200 Speaker 1: mining in the Port Optimizer, our port community system. We 215 00:12:47,280 --> 00:12:50,720 Speaker 1: worked with the retailers other large importers and said, there's 216 00:12:50,720 --> 00:12:53,120 Speaker 1: no shame here, Let's just move this cargo away for 217 00:12:53,160 --> 00:12:55,960 Speaker 1: the time being, so we could really move the product 218 00:12:56,040 --> 00:12:59,000 Speaker 1: to market that needed to get there. Think of holiday 219 00:12:59,000 --> 00:13:02,760 Speaker 1: products and parts and components for our factories across the nation. 220 00:13:03,760 --> 00:13:06,880 Speaker 1: Let's go in a little bit more clarity about why 221 00:13:07,000 --> 00:13:09,480 Speaker 1: the containers have built up so much in the first place, 222 00:13:09,480 --> 00:13:11,760 Speaker 1: because I feel like I have two different ideas in 223 00:13:11,800 --> 00:13:16,000 Speaker 1: my head. One is perhaps that the container owners viewed 224 00:13:16,040 --> 00:13:19,719 Speaker 1: it as free storage, and maybe the inland warehouses are 225 00:13:19,800 --> 00:13:23,520 Speaker 1: like capacity, so no rush taking it off the dock. 226 00:13:23,840 --> 00:13:27,000 Speaker 1: The other thing that we've talked about before with I 227 00:13:27,040 --> 00:13:29,520 Speaker 1: think you and some other guys is just that there 228 00:13:29,600 --> 00:13:31,880 Speaker 1: is a traffic jam at the port for the dra 229 00:13:32,040 --> 00:13:35,480 Speaker 1: truckers to even get the containers off the port, and 230 00:13:35,480 --> 00:13:37,600 Speaker 1: that there's only so many of them that can get in, 231 00:13:38,120 --> 00:13:40,360 Speaker 1: you know, in the course of a day, and when 232 00:13:40,400 --> 00:13:42,880 Speaker 1: their traffic jam, they can't get them out. So what 233 00:13:43,000 --> 00:13:46,840 Speaker 1: were in your view the underlying conditions that caused the 234 00:13:46,880 --> 00:13:50,320 Speaker 1: build up to get as bad as it did, Joe. 235 00:13:50,400 --> 00:13:54,800 Speaker 1: It was both, plus probably a dozen other issues. There 236 00:13:54,880 --> 00:13:58,800 Speaker 1: were importers who admittedly brought in cargo just in case, 237 00:13:59,480 --> 00:14:02,240 Speaker 1: not just in time as we had done in the past. 238 00:14:03,000 --> 00:14:06,160 Speaker 1: Many folks knew that once we started to get wound up, 239 00:14:06,440 --> 00:14:10,440 Speaker 1: as we saw the American consumer demand really increase, that 240 00:14:10,520 --> 00:14:12,319 Speaker 1: they were going to have to get orders into factories 241 00:14:12,360 --> 00:14:14,719 Speaker 1: in Asia as quick as they could and faster than 242 00:14:14,720 --> 00:14:17,840 Speaker 1: their competitors. So maybe they ordered a few more lounge 243 00:14:17,920 --> 00:14:22,000 Speaker 1: chairs or patio sets, maybe some flat screens well ahead 244 00:14:22,000 --> 00:14:23,880 Speaker 1: of the time for the Super Bowl, which is the 245 00:14:23,920 --> 00:14:29,000 Speaker 1: biggest sales time for TVs and a variety of other 246 00:14:29,360 --> 00:14:34,200 Speaker 1: important commodities. On the other side, we add and saw 247 00:14:34,320 --> 00:14:37,720 Speaker 1: many examples on the ground of importers having a very 248 00:14:37,760 --> 00:14:42,080 Speaker 1: difficult time getting their containers off port property. And that 249 00:14:42,120 --> 00:14:44,160 Speaker 1: could have been a trucker stuck in a long line, 250 00:14:44,440 --> 00:14:47,320 Speaker 1: that could have been an empty return policy of a terminal. 251 00:14:47,760 --> 00:14:50,120 Speaker 1: It could have been a bad order chassis or not 252 00:14:50,280 --> 00:14:53,280 Speaker 1: enough chassiss at the right place. So it was never 253 00:14:54,120 --> 00:14:56,360 Speaker 1: a situation we were just saying, Okay, this is the 254 00:14:56,400 --> 00:14:58,600 Speaker 1: only reason we're going to go after it. Just like 255 00:14:58,720 --> 00:15:02,080 Speaker 1: other areas of the supply I chained, they're so nuanced 256 00:15:02,080 --> 00:15:06,840 Speaker 1: and there are so many reasons behind the inefficiencies that 257 00:15:06,960 --> 00:15:09,840 Speaker 1: you just have to keep chipping away. So we did 258 00:15:09,920 --> 00:15:12,080 Speaker 1: work with some of the large retailers and say, if 259 00:15:12,120 --> 00:15:14,880 Speaker 1: you don't need your cargo right now, let's just move 260 00:15:14,880 --> 00:15:17,040 Speaker 1: it to the side. And they were so gracious and 261 00:15:17,120 --> 00:15:19,920 Speaker 1: working with us because they knew that they also had 262 00:15:19,960 --> 00:15:22,560 Speaker 1: product that has to be speeded up to get to market. 263 00:15:23,240 --> 00:15:25,680 Speaker 1: Then with the smaller and seasonal folks, we said, okay, 264 00:15:25,720 --> 00:15:27,200 Speaker 1: if we can do this and get a little more 265 00:15:27,240 --> 00:15:31,320 Speaker 1: maneuverability on our terminal tarmax, we're gonna get to your product. 266 00:15:31,360 --> 00:15:34,360 Speaker 1: But we're gonna do it through a program called Accelerate 267 00:15:34,480 --> 00:15:38,800 Speaker 1: Cargo l A where we turn this into a push system. 268 00:15:38,920 --> 00:15:41,600 Speaker 1: It's not simply wait for the hours of operation and 269 00:15:41,680 --> 00:15:44,680 Speaker 1: sign up for your appointment. We know where your cargo is, 270 00:15:44,720 --> 00:15:47,600 Speaker 1: how long it's been here. We're gonna come to you 271 00:15:48,200 --> 00:15:50,440 Speaker 1: and say this is how much cargo we have and 272 00:15:50,480 --> 00:15:52,800 Speaker 1: we can move out every day you're going to commit 273 00:15:52,840 --> 00:15:55,280 Speaker 1: to us that you'll take that about a cargo, you'll 274 00:15:55,320 --> 00:15:58,200 Speaker 1: have the truck power, will circle with the chassis people 275 00:15:58,200 --> 00:16:00,800 Speaker 1: in the terminal operators. It was every by working in 276 00:16:00,840 --> 00:16:04,720 Speaker 1: that node to make sure we could deliver the other 277 00:16:04,800 --> 00:16:08,400 Speaker 1: piece to this was also working with those notes if 278 00:16:08,440 --> 00:16:13,080 Speaker 1: we needed a more standardized process on export and empty returns. 279 00:16:13,120 --> 00:16:16,280 Speaker 1: That's why John Pocari was having the meetings three times 280 00:16:16,280 --> 00:16:20,080 Speaker 1: a week with industry stakeholders and these were decision makers. 281 00:16:20,120 --> 00:16:22,400 Speaker 1: So we went after it with a wide of a 282 00:16:22,560 --> 00:16:26,720 Speaker 1: lens as possible and keeping our perspective that knowing we 283 00:16:26,800 --> 00:16:29,320 Speaker 1: got one piece right, we probably have three other pieces 284 00:16:29,320 --> 00:16:32,240 Speaker 1: we had to get after. Next, I want to ask 285 00:16:32,280 --> 00:16:36,840 Speaker 1: you as well about the the expansion to operating seven. 286 00:16:36,920 --> 00:16:40,680 Speaker 1: How is that actually going and what obstacles have you 287 00:16:40,720 --> 00:16:43,560 Speaker 1: had to you know, sort of surmount in order to 288 00:16:43,640 --> 00:16:46,760 Speaker 1: expand the working hours, because I remember when you came 289 00:16:46,760 --> 00:16:49,240 Speaker 1: on last we were talking about, for instance, the difficulty 290 00:16:49,600 --> 00:16:52,920 Speaker 1: of the tightness of the labor market and the difficulty 291 00:16:53,040 --> 00:16:56,360 Speaker 1: of you know, either convincing existing workers to work night 292 00:16:56,400 --> 00:16:58,880 Speaker 1: shifts or getting new ones in who would be able 293 00:16:58,920 --> 00:17:01,800 Speaker 1: to work that schedule, and we were also talking a 294 00:17:01,800 --> 00:17:05,679 Speaker 1: little bit with various guests about local noise ordinances and 295 00:17:05,800 --> 00:17:08,879 Speaker 1: pollution restrictions and things like that, and basically just the 296 00:17:08,920 --> 00:17:13,080 Speaker 1: difficulty of moving to this twenty four hour schedule. And 297 00:17:13,160 --> 00:17:16,360 Speaker 1: yet it seems like like you've made it happen. So 298 00:17:16,720 --> 00:17:20,720 Speaker 1: what's changed on that front? All of that's true, Tracy, 299 00:17:20,800 --> 00:17:25,119 Speaker 1: and your recollection is absolutely spot on. I'll take you 300 00:17:25,200 --> 00:17:28,280 Speaker 1: back to October thirteenth, when I had the privilege of 301 00:17:28,320 --> 00:17:31,280 Speaker 1: meeting with the President of the United States directly. We 302 00:17:31,359 --> 00:17:35,240 Speaker 1: had other meetings with Secretary Bootage Edge, Brian des the 303 00:17:35,320 --> 00:17:38,040 Speaker 1: director of the NBC, and so many leaders on the 304 00:17:38,119 --> 00:17:41,639 Speaker 1: cargo ownership side. We at the Port of Los Angeles 305 00:17:41,680 --> 00:17:45,320 Speaker 1: traditionally work about nineteen hours a day day shift from 306 00:17:45,320 --> 00:17:49,280 Speaker 1: eight to five cleaning and sanitizing and equipment, then a 307 00:17:49,480 --> 00:17:52,720 Speaker 1: night side shift from six pm to three am. We're 308 00:17:52,760 --> 00:17:56,160 Speaker 1: trying to look at squeezing every hour of productivity from 309 00:17:56,160 --> 00:17:59,359 Speaker 1: this port that we possibly could, and working that three 310 00:17:59,400 --> 00:18:01,560 Speaker 1: to eight sift, or what we call the hoot shift, 311 00:18:02,000 --> 00:18:06,800 Speaker 1: was another one of those opportunities. The President, in his announcement, 312 00:18:06,920 --> 00:18:10,800 Speaker 1: was also trying to get this largely private sector supply 313 00:18:10,920 --> 00:18:14,760 Speaker 1: chain on the same schedule as the port, meaning that 314 00:18:14,800 --> 00:18:18,840 Speaker 1: the truckers who have eleven hours of service permitted to 315 00:18:18,880 --> 00:18:21,840 Speaker 1: them by the federal government every day and if they 316 00:18:21,960 --> 00:18:25,200 Speaker 1: run consecutive days must take time off, have to get 317 00:18:25,200 --> 00:18:28,000 Speaker 1: on that schedule to be service better run at nighttime 318 00:18:28,200 --> 00:18:31,000 Speaker 1: when there's a list traffic on our roads and freeways. 319 00:18:31,680 --> 00:18:35,080 Speaker 1: The warehousing complexes of which we boast more than two 320 00:18:35,240 --> 00:18:38,359 Speaker 1: billion square foot of space from the shores of the 321 00:18:38,400 --> 00:18:42,840 Speaker 1: Pacific out of the Southern California Desert region, traditionally operate 322 00:18:42,960 --> 00:18:47,040 Speaker 1: during the day, and both segments have a dearth of 323 00:18:47,080 --> 00:18:49,840 Speaker 1: workers on the job right now. It's been stated by 324 00:18:49,840 --> 00:18:53,199 Speaker 1: the American Trucking Association that we're short about eighty thousand 325 00:18:53,320 --> 00:18:56,240 Speaker 1: drivers nationwide, and I would tell you here in Southern 326 00:18:56,240 --> 00:18:59,520 Speaker 1: California's sports we could use probably three or four thousand 327 00:18:59,520 --> 00:19:04,960 Speaker 1: more trucks. Nationwide. We have job openings for four hundred 328 00:19:05,119 --> 00:19:08,479 Speaker 1: thousand warehouse workers and maybe eight to ten thousand here 329 00:19:08,520 --> 00:19:11,879 Speaker 1: in Southern California alone. So we've got to when we 330 00:19:11,920 --> 00:19:14,120 Speaker 1: can catch our breath one day here in the future, 331 00:19:14,520 --> 00:19:16,920 Speaker 1: we need to look at how we turn these two 332 00:19:16,960 --> 00:19:21,000 Speaker 1: segments into professions. Again, we may have to look at 333 00:19:21,040 --> 00:19:24,360 Speaker 1: compensation and benefits. But we have to find a way 334 00:19:24,359 --> 00:19:28,560 Speaker 1: as a broader industry, both public the federal, state, local governments, 335 00:19:28,720 --> 00:19:32,879 Speaker 1: as well as the private sector transportation and customers of 336 00:19:32,920 --> 00:19:36,800 Speaker 1: the port to see what we can do to attract, recruit, 337 00:19:37,200 --> 00:19:40,879 Speaker 1: and retain folks in this area. My grandfather was a 338 00:19:40,880 --> 00:19:43,800 Speaker 1: teamster strucker for the American Canned Company in New York 339 00:19:43,840 --> 00:19:47,679 Speaker 1: City for forty years. He put children through school, he 340 00:19:47,960 --> 00:19:51,440 Speaker 1: built a home on his own. Today, we've got to 341 00:19:51,480 --> 00:19:53,159 Speaker 1: find a way to look at the jobs in that 342 00:19:53,320 --> 00:19:55,800 Speaker 1: same way. It's an uphill climb. I know that that's 343 00:19:55,800 --> 00:19:57,760 Speaker 1: a lot of work in front of us, but we've 344 00:19:57,800 --> 00:20:00,879 Speaker 1: got to have enough folks in these segments to be 345 00:20:00,960 --> 00:20:03,960 Speaker 1: able to operate on the same schedule. As an example, 346 00:20:04,160 --> 00:20:08,239 Speaker 1: the ports can operate. So moving forward and open it up. 347 00:20:08,240 --> 00:20:12,240 Speaker 1: This dialogue has been good. We still also only use 348 00:20:13,280 --> 00:20:16,640 Speaker 1: a certain percentage of our truck appointments every day, again 349 00:20:16,720 --> 00:20:20,639 Speaker 1: for a variety of reasons, some operational, some the cargo 350 00:20:20,760 --> 00:20:23,119 Speaker 1: was just not needed, and others that we have to 351 00:20:23,160 --> 00:20:26,280 Speaker 1: improve upon. Can you talk to us a little bit 352 00:20:26,320 --> 00:20:30,040 Speaker 1: more about the role that Pricari and the White House 353 00:20:30,040 --> 00:20:32,520 Speaker 1: have played. So you mentioned three meetings a week. When 354 00:20:32,560 --> 00:20:34,679 Speaker 1: he came on the podcast, he talked about his role 355 00:20:34,800 --> 00:20:38,200 Speaker 1: simply being like an honest broker, someone who was trusted 356 00:20:38,240 --> 00:20:42,080 Speaker 1: by all the different parties. What happened or what has 357 00:20:42,119 --> 00:20:45,480 Speaker 1: happened or what is happening in those discussions, and how 358 00:20:45,520 --> 00:20:49,919 Speaker 1: does simply getting everyone on the same page allow greater 359 00:20:50,000 --> 00:20:54,560 Speaker 1: throughput with the same physical resources as before. Without this 360 00:20:54,920 --> 00:20:58,159 Speaker 1: and without John, I would say right now, we'd be 361 00:20:58,200 --> 00:21:02,480 Speaker 1: having a very different conversation Asian show. This all started 362 00:21:03,760 --> 00:21:08,360 Speaker 1: back in February when President Biden wrote up the Executive 363 00:21:08,440 --> 00:21:11,879 Speaker 1: Order on Supply Chain that also asked for a deeper 364 00:21:11,920 --> 00:21:15,399 Speaker 1: look into certain commodities, think these uh microchips that go 365 00:21:15,440 --> 00:21:20,040 Speaker 1: into our phones are automobiles and our computers. And then 366 00:21:20,160 --> 00:21:23,760 Speaker 1: the President created the Supply Chain Disruption Task Force TRI 367 00:21:24,040 --> 00:21:29,600 Speaker 1: chaired by the Secretaries of Labor, Transportation, and Commerce. Next 368 00:21:29,640 --> 00:21:34,200 Speaker 1: out of that shoot was the July virtual round table 369 00:21:34,440 --> 00:21:39,360 Speaker 1: chaired by Secretary Bootage that had all private sector industry 370 00:21:39,440 --> 00:21:42,440 Speaker 1: leaders joined in addition to the ports in Southern California 371 00:21:42,800 --> 00:21:47,120 Speaker 1: and some others. Shortly after that round table, jump Acari 372 00:21:47,280 --> 00:21:51,280 Speaker 1: was named as Port Envoy and we began going through 373 00:21:52,040 --> 00:21:55,760 Speaker 1: all of the details, all of the personnel and all 374 00:21:55,800 --> 00:21:59,359 Speaker 1: of the requirements of this industry. Had we not had 375 00:21:59,400 --> 00:22:04,200 Speaker 1: that a nerve shift, beginning with President Biden's EO, all 376 00:22:04,240 --> 00:22:07,200 Speaker 1: the way through the personnel moves he made, we'd be 377 00:22:07,240 --> 00:22:11,600 Speaker 1: in a much different place. John's accessibility has been first 378 00:22:11,640 --> 00:22:14,640 Speaker 1: and foremost one of the best things that's happened. He's 379 00:22:14,680 --> 00:22:18,360 Speaker 1: been able to use that cashier to bring together the 380 00:22:18,440 --> 00:22:22,720 Speaker 1: necessary decision makers in the industry. And while no one 381 00:22:22,880 --> 00:22:26,520 Speaker 1: is declaring victory and we have a tremendously long path 382 00:22:26,600 --> 00:22:28,760 Speaker 1: in front of us, I think we're a lot better 383 00:22:28,800 --> 00:22:32,200 Speaker 1: for having John around and helping us get to those 384 00:22:32,240 --> 00:22:36,080 Speaker 1: decision points we needed. First and foremost was dating back 385 00:22:36,119 --> 00:22:39,760 Speaker 1: to the summertime, many folks thought that we were going 386 00:22:39,800 --> 00:22:41,720 Speaker 1: to have a real rough go of it when it 387 00:22:41,760 --> 00:22:45,480 Speaker 1: comes to the retail market and especially the holiday season. 388 00:22:46,040 --> 00:22:49,080 Speaker 1: But as I reported to John and many many members 389 00:22:49,160 --> 00:22:53,120 Speaker 1: of the media, including you, both are savvy, American import 390 00:22:53,200 --> 00:22:56,760 Speaker 1: community began bringing holiday goods in as early as June 391 00:22:57,560 --> 00:23:01,200 Speaker 1: because they saw the longer lead times, the transit times 392 00:23:01,240 --> 00:23:04,560 Speaker 1: being extended, and so many complexities in the supply chain. 393 00:23:05,080 --> 00:23:08,720 Speaker 1: Even though that created a real storm of cargo think 394 00:23:09,040 --> 00:23:13,520 Speaker 1: keeping up with consumer demand holiday goods and seasonal goods, 395 00:23:13,840 --> 00:23:18,480 Speaker 1: back to school, fall fashion, Halloween all converging at one 396 00:23:18,560 --> 00:23:21,359 Speaker 1: time this summer. It really helped get us in a 397 00:23:21,440 --> 00:23:25,280 Speaker 1: position to have some assemblance of progress leading up to 398 00:23:25,320 --> 00:23:29,480 Speaker 1: the holiday buying season. Many folks also have said that 399 00:23:29,520 --> 00:23:33,040 Speaker 1: they started shopping earlier this season at the recommendation of 400 00:23:33,080 --> 00:23:35,960 Speaker 1: what they saw from the federal and state governments, what 401 00:23:36,000 --> 00:23:38,200 Speaker 1: they heard from the ports, and what they heard from 402 00:23:38,240 --> 00:23:40,879 Speaker 1: shows like this. Get out there a little earlier and 403 00:23:41,000 --> 00:23:44,159 Speaker 1: see if you could take that time to start your 404 00:23:44,200 --> 00:23:48,040 Speaker 1: holiday shopping season with an eye on just that in mind. 405 00:24:03,400 --> 00:24:06,360 Speaker 1: So are there ever any areas of tension that might 406 00:24:06,480 --> 00:24:10,440 Speaker 1: arise between you know, an appointee from the federal government 407 00:24:10,800 --> 00:24:14,760 Speaker 1: and business. I mean, I know you're owned by the 408 00:24:14,800 --> 00:24:17,200 Speaker 1: City of Los Angeles, but you're still a business trying 409 00:24:17,200 --> 00:24:20,919 Speaker 1: to generate revenue and some income for the city. And 410 00:24:21,000 --> 00:24:24,560 Speaker 1: I can imagine, for instance, when um John Porcari says that, well, 411 00:24:24,600 --> 00:24:27,720 Speaker 1: maybe we should be rerouting a lot of containers two 412 00:24:27,760 --> 00:24:31,920 Speaker 1: different ports that actually have the capacity to move them, 413 00:24:31,960 --> 00:24:35,560 Speaker 1: I could imagine that that might be something undesirable for 414 00:24:35,640 --> 00:24:39,920 Speaker 1: the part of Los Angeles feel in normal times, Tracy 415 00:24:40,000 --> 00:24:44,800 Speaker 1: you're correct, but at this point in time, within operating 416 00:24:44,800 --> 00:24:49,560 Speaker 1: at a hundred year pandemic with consumer buying surge the 417 00:24:49,640 --> 00:24:53,159 Speaker 1: likes of which we've never seen supply chain disruption worldwide, 418 00:24:53,160 --> 00:24:56,040 Speaker 1: but maybe more acute here in the United States because 419 00:24:56,080 --> 00:24:59,760 Speaker 1: the size of our economy and the spotlight that's been 420 00:24:59,760 --> 00:25:02,359 Speaker 1: on us, this was a time, I feel that you 421 00:25:02,440 --> 00:25:05,400 Speaker 1: had to take off your local hat and do what 422 00:25:05,520 --> 00:25:09,800 Speaker 1: was in the best interest of the country for economic recovery, 423 00:25:09,960 --> 00:25:14,240 Speaker 1: pulling people together and everything in between. It also just 424 00:25:14,440 --> 00:25:17,119 Speaker 1: happens to be the case that the cargo that traverses 425 00:25:17,160 --> 00:25:20,520 Speaker 1: the Port of Los Angeles reaches each of our nation's 426 00:25:20,560 --> 00:25:25,280 Speaker 1: four hundred and thirty five congressional districts. Therefore, automatically, it 427 00:25:25,400 --> 00:25:28,960 Speaker 1: is a conversation of national significance. And we have talked 428 00:25:29,000 --> 00:25:31,600 Speaker 1: about bringing some of these new entrants to the trade 429 00:25:32,280 --> 00:25:36,360 Speaker 1: carrying smaller quantities of cargo on smaller vessels, bring those 430 00:25:36,359 --> 00:25:39,960 Speaker 1: to other ports, whether it be Oakland, San Diego, Winini 431 00:25:40,080 --> 00:25:44,360 Speaker 1: up in Ventura County. If the four corner strategy had 432 00:25:44,400 --> 00:25:47,920 Speaker 1: to be deployed again by certain importers, meaning bringing more 433 00:25:47,960 --> 00:25:50,080 Speaker 1: cargo to the Eastern Gulf Coast, if that's part of 434 00:25:50,080 --> 00:25:54,800 Speaker 1: the equation that's okay too. But still, even with all 435 00:25:54,840 --> 00:25:57,359 Speaker 1: of the details and all of the concerns in this 436 00:25:57,520 --> 00:26:01,160 Speaker 1: US supply chain today, bringing more or more cargo through 437 00:26:01,200 --> 00:26:05,399 Speaker 1: the Southern California Gateway is the best opportunity we have 438 00:26:05,640 --> 00:26:08,600 Speaker 1: right now to make a difference for the US economy. 439 00:26:08,640 --> 00:26:12,000 Speaker 1: But again, it just comes down to situational awareness and 440 00:26:12,080 --> 00:26:15,440 Speaker 1: doing what's best for the United States of America. What's 441 00:26:15,480 --> 00:26:19,439 Speaker 1: the opportunity with the infrastructure money that's been allocated to ports, 442 00:26:19,560 --> 00:26:22,119 Speaker 1: what what will that do for the ports system or 443 00:26:22,160 --> 00:26:26,840 Speaker 1: specifically your report? I think specifically for our port it 444 00:26:26,880 --> 00:26:31,160 Speaker 1: will allow us to accelerate projects that we classify as 445 00:26:31,240 --> 00:26:35,719 Speaker 1: shovel ready. We have the financial wherewithal and capability, and 446 00:26:35,720 --> 00:26:38,639 Speaker 1: that's how we were able to invest through cycle and 447 00:26:38,800 --> 00:26:43,800 Speaker 1: keep three thousand construction jobs going when it was difficulty 448 00:26:43,800 --> 00:26:47,560 Speaker 1: in other sectors. As we've talked about before, those shovel 449 00:26:47,560 --> 00:26:51,320 Speaker 1: ready projects begin with a workforce training and development center 450 00:26:51,560 --> 00:26:53,800 Speaker 1: that will be the first of its kind in the 451 00:26:53,880 --> 00:26:59,720 Speaker 1: United States. As we know, technology, robotics and the transition 452 00:26:59,800 --> 00:27:03,679 Speaker 1: to this next level is going to be difficult on 453 00:27:03,720 --> 00:27:07,240 Speaker 1: the workforce, but we cannot leave them behind. So this 454 00:27:07,320 --> 00:27:11,600 Speaker 1: Workforce Training Center is designed to reskille, up skill, and 455 00:27:11,680 --> 00:27:15,199 Speaker 1: promote opportunities for the next generation of worker. Think of 456 00:27:15,240 --> 00:27:18,160 Speaker 1: a mechanic who goes to work with a toolbox today. 457 00:27:18,200 --> 00:27:20,960 Speaker 1: They may be upgrading and fine tuning that equipment with 458 00:27:20,960 --> 00:27:23,680 Speaker 1: a computer tomorrow, and those are the skills they're gonna need. 459 00:27:24,359 --> 00:27:27,280 Speaker 1: Second is repurposing land. As we've seen more of this 460 00:27:27,400 --> 00:27:30,240 Speaker 1: cargo flow and how it's changed, we're gonna have to 461 00:27:30,240 --> 00:27:34,639 Speaker 1: repurpose land and developed what we call grade separations flyovers, 462 00:27:34,680 --> 00:27:37,480 Speaker 1: so we're not getting in the way of local commuters 463 00:27:37,480 --> 00:27:40,840 Speaker 1: and school buses, but allowing for trucks and trains to 464 00:27:40,960 --> 00:27:44,240 Speaker 1: move and remove bottlenecks. That's what's going to happen here 465 00:27:44,240 --> 00:27:47,679 Speaker 1: in Los Angeles. And over the last ten years, the 466 00:27:47,720 --> 00:27:51,600 Speaker 1: federal government in U. S. Congress have out invested the 467 00:27:51,600 --> 00:27:54,440 Speaker 1: West Coast ports at a rate of eleven to one. 468 00:27:54,920 --> 00:27:58,159 Speaker 1: That means about eleven billion dollars has gone to ports 469 00:27:58,160 --> 00:28:00,600 Speaker 1: on the eastern Gulf Coast compared to a little more 470 00:28:00,600 --> 00:28:03,320 Speaker 1: than one billion dollars here on the West Coast. And 471 00:28:03,400 --> 00:28:07,320 Speaker 1: with forty of the nation's imports coming through Southern California, 472 00:28:07,720 --> 00:28:10,040 Speaker 1: I think the best return on investment for the American 473 00:28:10,119 --> 00:28:13,200 Speaker 1: citizen is right here in Los Angeles and Long Beach. 474 00:28:15,320 --> 00:28:18,679 Speaker 1: At the very beginning of our conversation, you described a 475 00:28:18,720 --> 00:28:21,640 Speaker 1: lot of these supply chain strains as sort of being 476 00:28:21,840 --> 00:28:24,399 Speaker 1: um like whack a mole, you know, you kind of 477 00:28:24,400 --> 00:28:26,159 Speaker 1: get a handle on one of them, and then a 478 00:28:26,200 --> 00:28:30,400 Speaker 1: new issue pops up. What are the major issues? Now? 479 00:28:30,880 --> 00:28:33,560 Speaker 1: What's your area of focus and what's taking up the 480 00:28:33,600 --> 00:28:35,880 Speaker 1: most of your time? If you could be as specific 481 00:28:35,920 --> 00:28:40,000 Speaker 1: as possible. Sure, I think it all starts with consumer 482 00:28:40,080 --> 00:28:43,320 Speaker 1: demand and it remains elevated. And that's great because sevent 483 00:28:43,840 --> 00:28:47,120 Speaker 1: of our g d P is driven by us buying products, 484 00:28:47,160 --> 00:28:50,400 Speaker 1: and I'm no different than anybody else. Right now, we've 485 00:28:50,400 --> 00:28:53,680 Speaker 1: got to look at what fulfillment means compared to traditional 486 00:28:53,720 --> 00:28:56,720 Speaker 1: bricks and mortar retail sales and have a good focus 487 00:28:56,760 --> 00:28:59,640 Speaker 1: on that. So that's breaking down a segment or two 488 00:28:59,680 --> 00:29:02,680 Speaker 1: within that import retail system that maybe we need a 489 00:29:02,720 --> 00:29:05,280 Speaker 1: finder look at. We've got to be able to scale 490 00:29:05,400 --> 00:29:08,239 Speaker 1: better as an industry, both up when we see these 491 00:29:08,320 --> 00:29:11,960 Speaker 1: surges and back down during what we call slack season 492 00:29:12,120 --> 00:29:15,320 Speaker 1: or or ebbing of the flow. The next piece are 493 00:29:15,520 --> 00:29:21,920 Speaker 1: are all these undercurrents that have happened since COVID nineteen began. Remember, 494 00:29:22,000 --> 00:29:25,120 Speaker 1: even dating back to the days of the Trade policy 495 00:29:25,160 --> 00:29:29,680 Speaker 1: and the previous administration, we went about eight months importing 496 00:29:30,160 --> 00:29:33,720 Speaker 1: twenty less than we normally do, and then we pivoted 497 00:29:33,760 --> 00:29:36,560 Speaker 1: so quickly to all of us buying more product than 498 00:29:36,600 --> 00:29:41,480 Speaker 1: ever before. So this surge predominantly has been the American 499 00:29:41,520 --> 00:29:44,120 Speaker 1: importer are just trying to keep up with the consumers demand. 500 00:29:44,920 --> 00:29:49,360 Speaker 1: We next will have to manage an early lunar new year, 501 00:29:49,440 --> 00:29:52,000 Speaker 1: so the imports will remain elevated, and we're seeing that 502 00:29:52,080 --> 00:29:54,760 Speaker 1: in the number of ships coming across the Pacific right now. 503 00:29:55,440 --> 00:29:59,120 Speaker 1: Then in the second quarter, the retailers and home improvement 504 00:29:59,160 --> 00:30:01,520 Speaker 1: stores are telling me they're going to focus on inventory 505 00:30:01,600 --> 00:30:06,080 Speaker 1: replenishment because our inventory sales ratio is still the lowest 506 00:30:06,120 --> 00:30:09,360 Speaker 1: that's been in a decade. While we have seen inventories 507 00:30:09,440 --> 00:30:12,120 Speaker 1: move up, they need to get better. According to the 508 00:30:12,160 --> 00:30:16,480 Speaker 1: experts built within all of this, because of the import strength, 509 00:30:16,960 --> 00:30:21,720 Speaker 1: empty containers have piled up, and there's been a big 510 00:30:21,760 --> 00:30:25,520 Speaker 1: conversation among John Pacari's meetings of how we get those 511 00:30:25,520 --> 00:30:30,840 Speaker 1: empties evacuated to keep the terminal Tarmax fluid and make 512 00:30:30,880 --> 00:30:34,000 Speaker 1: sure we have the most maneuverability possible. Because we saw 513 00:30:34,040 --> 00:30:37,160 Speaker 1: what happened when imports piled up. Everything got gummed up 514 00:30:37,240 --> 00:30:39,600 Speaker 1: right there at the marine terminal. I don't want to 515 00:30:39,640 --> 00:30:43,960 Speaker 1: have the same issue repeat itself with empty containers. So 516 00:30:44,000 --> 00:30:46,840 Speaker 1: we've asked and in some cases imployed our shipping lines 517 00:30:47,120 --> 00:30:50,560 Speaker 1: bringing these sweeper vessels, bringing as much capacity as you can, 518 00:30:51,040 --> 00:30:54,200 Speaker 1: even though there's not much in the marketplace right now, 519 00:30:54,240 --> 00:30:57,240 Speaker 1: but use every available slot to get these empties out. 520 00:30:57,680 --> 00:31:00,320 Speaker 1: Focus on what you can do for the American sport 521 00:31:00,480 --> 00:31:03,640 Speaker 1: and turn those containers as quickly as possible so we 522 00:31:03,680 --> 00:31:06,440 Speaker 1: can keep the sense of fluidity and it all pans 523 00:31:06,480 --> 00:31:08,920 Speaker 1: out because we've seen our container dwell times. So the 524 00:31:09,120 --> 00:31:13,440 Speaker 1: time the container sits be cut in about half for 525 00:31:13,520 --> 00:31:17,200 Speaker 1: trucking and down to presearche lows for our rail product 526 00:31:17,320 --> 00:31:20,000 Speaker 1: right now. So again, all of these kpi s and 527 00:31:20,080 --> 00:31:23,320 Speaker 1: measurables are looked at every day and each one has 528 00:31:23,360 --> 00:31:27,320 Speaker 1: a knock on effect right now, empties, But again, Tracy, 529 00:31:27,400 --> 00:31:30,000 Speaker 1: to your point, we're not just focused on empties and 530 00:31:30,080 --> 00:31:34,480 Speaker 1: letting everything else run. Empties have risen to the awareness 531 00:31:34,560 --> 00:31:36,640 Speaker 1: level that we need, but we're still looking at that 532 00:31:36,720 --> 00:31:39,520 Speaker 1: stream of another dozen KPIs that we have to manage 533 00:31:39,560 --> 00:31:42,800 Speaker 1: every day. So you mentioned the lunar new year, You 534 00:31:42,880 --> 00:31:46,760 Speaker 1: mentioned the eventual Q two or stocking the and that's 535 00:31:46,760 --> 00:31:50,240 Speaker 1: going to be a huge source of demand. Continued at 536 00:31:50,320 --> 00:31:52,400 Speaker 1: that point, I don't know if we're looking at middle 537 00:31:52,400 --> 00:31:56,080 Speaker 1: of two, would you expect to see the number of 538 00:31:56,160 --> 00:31:59,000 Speaker 1: ships at anchor and some of these other metrics start 539 00:31:59,040 --> 00:32:02,640 Speaker 1: to meaningfully to climb. Yeah, that's the gold show. I 540 00:32:02,720 --> 00:32:07,080 Speaker 1: can't predict exactly when we hit this certain number or 541 00:32:07,480 --> 00:32:10,040 Speaker 1: or what the ships sitting at anchor will look like, 542 00:32:10,560 --> 00:32:13,600 Speaker 1: but I'm starting to see a little more clearly what 543 00:32:13,840 --> 00:32:18,240 Speaker 1: segments of upcoming demand will be. And it's based on 544 00:32:18,280 --> 00:32:21,600 Speaker 1: the expert advice what our data mining is showing us. 545 00:32:21,920 --> 00:32:23,840 Speaker 1: But it will give us a chance if we do 546 00:32:23,920 --> 00:32:27,080 Speaker 1: these next couple iterations the right way as an industry, 547 00:32:27,160 --> 00:32:30,160 Speaker 1: as a collective, we got a chance to position ourselves 548 00:32:30,240 --> 00:32:33,960 Speaker 1: next summertime to pivot into a peak season where we 549 00:32:34,000 --> 00:32:38,320 Speaker 1: have a real chance to improve that supply chain certainty 550 00:32:38,560 --> 00:32:42,920 Speaker 1: that has been so elusive to date, any concerns about 551 00:32:42,960 --> 00:32:47,239 Speaker 1: the omicron variant tracy. Every day there's something in the 552 00:32:47,280 --> 00:32:50,800 Speaker 1: news that's impacting the supply chain. And that's one of them. 553 00:32:50,840 --> 00:32:53,959 Speaker 1: With Omicron, we're looking at exactly what we can do, 554 00:32:54,240 --> 00:32:57,400 Speaker 1: what our backup plans are going to be across the 555 00:32:57,440 --> 00:33:01,080 Speaker 1: ocean as well as right here at home. At this point, 556 00:33:01,160 --> 00:33:04,440 Speaker 1: we don't see anything that's really debilitating in the industry. 557 00:33:04,520 --> 00:33:07,280 Speaker 1: We've shown we can pivot to the second and third 558 00:33:07,320 --> 00:33:11,520 Speaker 1: waves of COVID nineteen that hit South and Central China 559 00:33:11,680 --> 00:33:15,920 Speaker 1: earlier this year. We've been extremely resilient on the docks 560 00:33:15,960 --> 00:33:19,040 Speaker 1: here in Los Angeles as well as our trucking firms 561 00:33:19,040 --> 00:33:21,960 Speaker 1: and our warehouses. We just need to keep our eye 562 00:33:22,000 --> 00:33:26,160 Speaker 1: on the prize every day and keep those contingency plans 563 00:33:26,640 --> 00:33:30,440 Speaker 1: at the forefront should something happen that requires us to 564 00:33:30,520 --> 00:33:36,480 Speaker 1: pivot very quickly. Well. Jean Jean Taroca, Executive director of 565 00:33:36,480 --> 00:33:38,400 Speaker 1: the Port of Los Angeles, thank you so much for 566 00:33:38,440 --> 00:33:41,960 Speaker 1: coming out online. Joe Tracy, always good speaking with you. 567 00:33:42,000 --> 00:33:45,520 Speaker 1: Thank you again. Well, we'll talk to you next summer. Thanks, 568 00:33:45,960 --> 00:33:48,360 Speaker 1: look forward to it. Hey available for you anytime, No 569 00:33:48,440 --> 00:34:03,040 Speaker 1: problem at all, all right, take care. So I think 570 00:34:03,120 --> 00:34:08,200 Speaker 1: just in that conversation it's pretty clear how you there's 571 00:34:08,360 --> 00:34:10,239 Speaker 1: it's sort of hopeless, the idea of like, oh, we're 572 00:34:10,239 --> 00:34:12,680 Speaker 1: gonna get one measure that tells us whether the supply 573 00:34:12,760 --> 00:34:16,040 Speaker 1: chain is getting better. Yeah, I think that's right. Although 574 00:34:16,080 --> 00:34:18,960 Speaker 1: I was thinking maybe we should start a supply chain index. 575 00:34:20,400 --> 00:34:23,160 Speaker 1: We should and honestly, if we could, we could probably 576 00:34:23,200 --> 00:34:24,879 Speaker 1: make a lot of money. Like if we were like, oh, 577 00:34:24,920 --> 00:34:27,520 Speaker 1: this is the one and it became the reference, we 578 00:34:27,640 --> 00:34:32,960 Speaker 1: probably start doing options or derivatives tied to the futures futures, 579 00:34:33,200 --> 00:34:36,720 Speaker 1: supply chain futures. We we helped the industry by allowing 580 00:34:36,760 --> 00:34:38,960 Speaker 1: them to hedge, you know. But your question it's like, 581 00:34:39,000 --> 00:34:40,799 Speaker 1: you know, he mentioned the whack them and then your 582 00:34:40,920 --> 00:34:43,279 Speaker 1: question at the end, it's like, Okay, what are you, like, 583 00:34:44,200 --> 00:34:46,560 Speaker 1: what are you going after right now? Like what's popping up? 584 00:34:47,000 --> 00:34:48,839 Speaker 1: Sort of like got at it? Like it really does 585 00:34:48,880 --> 00:34:51,840 Speaker 1: seem like it's still you know, there are some areas 586 00:34:51,840 --> 00:34:54,960 Speaker 1: where they're getting better. It sounds like legitimately there are 587 00:34:55,400 --> 00:34:59,279 Speaker 1: fewer containers on the ground on dry land there, but 588 00:34:59,400 --> 00:35:02,760 Speaker 1: still the number of issues that continue to arise seems 589 00:35:02,800 --> 00:35:06,399 Speaker 1: pretty extraordinary. Yeah. And I mean the other thing that's 590 00:35:06,440 --> 00:35:11,360 Speaker 1: coming through pretty clearly is this idea of the first 591 00:35:11,440 --> 00:35:15,120 Speaker 1: quarter of two after lunar New Year, which I think 592 00:35:15,280 --> 00:35:17,359 Speaker 1: this year is um I think it's the first week 593 00:35:17,400 --> 00:35:23,000 Speaker 1: of February. Everyone again seems to be coalescing around that 594 00:35:23,120 --> 00:35:27,360 Speaker 1: moment as the sort of inflection point where we should 595 00:35:27,560 --> 00:35:31,920 Speaker 1: actually start to see some measurable improvement I guess in 596 00:35:32,040 --> 00:35:36,880 Speaker 1: controvertible improvement in supply chain issues. So again, like I 597 00:35:36,960 --> 00:35:39,960 Speaker 1: feel like that's going to be an interesting moment to watch. 598 00:35:41,080 --> 00:35:43,080 Speaker 1: And then we're going to have this booming demand because 599 00:35:43,120 --> 00:35:46,200 Speaker 1: of the inventory were stocking, which should keep like GDP 600 00:35:46,520 --> 00:35:50,360 Speaker 1: generally pretty strong in the US because we're running pretty 601 00:35:50,440 --> 00:35:54,160 Speaker 1: lean as he mentioned, So there is this there's this 602 00:35:54,200 --> 00:35:57,480 Speaker 1: big like sort of well of demand waiting out there 603 00:35:57,520 --> 00:36:01,160 Speaker 1: for retailers to catch their breath and actually uh get 604 00:36:01,200 --> 00:36:05,080 Speaker 1: up to inventory levels that they're comfortable with. Yeah, that's true, 605 00:36:05,120 --> 00:36:07,080 Speaker 1: although I feel like you could also argue it the 606 00:36:07,080 --> 00:36:09,840 Speaker 1: other way, which is, you know, like maybe people have 607 00:36:09,960 --> 00:36:14,440 Speaker 1: been over ordering already in response to very strong consumer demand, 608 00:36:14,520 --> 00:36:17,840 Speaker 1: and you know, if the economy starts to slow, which 609 00:36:17,960 --> 00:36:21,440 Speaker 1: it potentially could do in two then suddenly they're not 610 00:36:21,480 --> 00:36:24,680 Speaker 1: going to need as many goods as they thought they were. 611 00:36:24,760 --> 00:36:28,120 Speaker 1: So I guess again, like the big theme that kind 612 00:36:28,120 --> 00:36:31,080 Speaker 1: of comes through all of this is just how difficult 613 00:36:31,120 --> 00:36:35,320 Speaker 1: all these supply chain issues and ordering an inventory actually 614 00:36:35,840 --> 00:36:38,800 Speaker 1: are to predict, like how hard it is and how 615 00:36:38,840 --> 00:36:41,359 Speaker 1: often we seem to get it wrong, and how that 616 00:36:41,440 --> 00:36:45,399 Speaker 1: tends to lead to uh problems that become very very 617 00:36:45,440 --> 00:36:48,880 Speaker 1: difficult to solve. I've been thinking about this because, like, 618 00:36:48,920 --> 00:36:53,480 Speaker 1: look like it's December, so we're basically like two years 619 00:36:53,680 --> 00:36:56,959 Speaker 1: solidly into I mean, you know, you could say March 620 00:36:57,480 --> 00:37:00,600 Speaker 1: twenty when it really started, but I've we first heard 621 00:37:00,600 --> 00:37:03,960 Speaker 1: about it in December. It's really two years into this, 622 00:37:04,680 --> 00:37:08,279 Speaker 1: and no one or let's say not nobody, but not 623 00:37:08,440 --> 00:37:12,480 Speaker 1: many people would have guessed in December nineteen that we'd 624 00:37:12,560 --> 00:37:15,879 Speaker 1: still be talking about this pandemic so much two years later. 625 00:37:16,400 --> 00:37:19,880 Speaker 1: It really seems like it makes it hard to plan anything. 626 00:37:19,920 --> 00:37:22,400 Speaker 1: And so you think about investment, you think about oh, 627 00:37:23,480 --> 00:37:26,120 Speaker 1: you know, sort of permanent changes or what are appropriate 628 00:37:26,200 --> 00:37:31,360 Speaker 1: levels of ordering or inventory levels. It's pretty hard to predict, 629 00:37:31,719 --> 00:37:34,280 Speaker 1: and so you know, you think about like supply chain persistence, 630 00:37:34,320 --> 00:37:37,760 Speaker 1: inflation persistence, and so forth. Like it seems like probably 631 00:37:37,800 --> 00:37:40,319 Speaker 1: a lot of that is simply because the last two 632 00:37:40,360 --> 00:37:43,920 Speaker 1: years have simply been so unpredictable. Yeah, I think that's right. 633 00:37:43,960 --> 00:37:47,080 Speaker 1: I mean, just think back to March if you told 634 00:37:47,120 --> 00:37:48,840 Speaker 1: someone then that we were going to have a big 635 00:37:48,880 --> 00:37:52,480 Speaker 1: boom in consumer spending within the next year, I think 636 00:37:52,480 --> 00:37:54,600 Speaker 1: everyone would have thought you were crazy. And that's exactly 637 00:37:54,680 --> 00:37:57,359 Speaker 1: what we had, and partly because we didn't expect it 638 00:37:57,480 --> 00:38:00,640 Speaker 1: is the reason that we are now encountering so much 639 00:38:00,680 --> 00:38:04,640 Speaker 1: trouble because people cut back on their inventories and didn't 640 00:38:04,640 --> 00:38:07,880 Speaker 1: make the appropriate amount of investment, and so we're suffering, 641 00:38:08,040 --> 00:38:10,759 Speaker 1: you know, still almost a year and a half on 642 00:38:11,800 --> 00:38:14,120 Speaker 1: and the pandemic is still going on, and we really, like, 643 00:38:14,440 --> 00:38:17,879 Speaker 1: you know, in some sense, life is normalizing, but it's 644 00:38:17,880 --> 00:38:21,040 Speaker 1: not normal, and we really do not know when we'll 645 00:38:21,040 --> 00:38:23,600 Speaker 1: be at some sort of like okay, this is this 646 00:38:23,719 --> 00:38:26,319 Speaker 1: is stability, Like we really have no idea and so, 647 00:38:26,920 --> 00:38:29,480 Speaker 1: you know, any anything here in terms of ordering or 648 00:38:29,520 --> 00:38:34,480 Speaker 1: good the good services mix, it's still pretty much guesswork. Yeah, Well, 649 00:38:34,960 --> 00:38:38,200 Speaker 1: on that happy note, shall we leave it there? Let's 650 00:38:38,239 --> 00:38:41,360 Speaker 1: leave it there, all right? This has been another episode 651 00:38:41,440 --> 00:38:44,120 Speaker 1: of the Odd Lots Podcast. I'm Tracy Alloway. You can 652 00:38:44,160 --> 00:38:47,799 Speaker 1: follow me on Twitter at Tracy Alloway and I'm Joe 653 00:38:47,800 --> 00:38:50,239 Speaker 1: Why isn't though you can follow me on Twitter at 654 00:38:50,280 --> 00:38:53,320 Speaker 1: the Stalwart and you should follow uh the Port of 655 00:38:53,400 --> 00:38:57,520 Speaker 1: Los Angeles on Twitter, headed by Jeane Siroca. Their handles 656 00:38:57,600 --> 00:39:01,560 Speaker 1: at Ports of l A, follow our producer Laura Carlson's 657 00:39:01,640 --> 00:39:05,320 Speaker 1: at Laura and Carlton. Followed the bloomberghead of podcast Francesco 658 00:39:05,400 --> 00:39:08,440 Speaker 1: Leavi at Francesco Today, and check out all of our 659 00:39:08,480 --> 00:39:12,760 Speaker 1: podcasts at Bloomberg under the handle at podcasts. Thanks for listening.