Many companies are now abundantly aware that LA and Long Beach port disruption exposed potentially catastrophic cracks in the US supply network. But even as a degree of resolution is underway, it would appear that certain lessons have yet to be learned.

This is concerning for two reasons. First, LA and Long Beach port disruption serve as indicators to broader supply chain risks and our ability — or lack thereof — to manage them. Second, if, as Charles Kettering maintained, “A problem well defined is half solved,” it would appear we are looking not at a problem half solved but at one further complicated by inadequately conceived solutions.

At Pivot International, we are global supply chain leaders with nearly a half-century of experience helping clients navigate complex risk and deliver successful innovations to market. With new product development (NPD) expertise across fourteen industries, in-house DFM talent, and 320,000 square feet of manufacturing capacity, we provide specialized solutions and mitigation strategies to ease or overcome your toughest supply chain challenges. As we have mobilized to fortify our clients against the current crisis, we believe it is of utmost importance that supply chain leaders draw meaningful lessons from LA and Long Beach to apply to US supply chains at large. To begin this exercise, we must first understand some of what makes the LA and Long Beach ports unique:  

  • Shortest transit routes from Asia ports
  • Berth and discharge capacity for Ultra-Large carrier vessels in the Transpacific service strings
  • High levels of dock throughput for berthed vessels
  • Ground zero for major importers
  • Proximity to local distribution center operations, including the Inland Empire

Root Cause Analysis — A Rough Sketch

While this information is important, it is highly partial. Causal analysis is required to contend with the complexity of port gridlock and overarching supply chain risk. While such an analysis is beyond the scope of this piece, we can map the problem/opportunity space across the following six vectors, identifying the most salient challenges and considerations within each: 

  • Geopolitical — Lack of centralized oversight, infighting, union tensions
  • Financial — A/R and A/P cycles, freight, accessorial charges
  • Staffing — Terminal, trucking, warehouses
  • Physical — Storage space, climate conditions, transit miles
  • Assets — Vessel-sharing alliances, terminal access, fuel costs
  • Machinery — Power units, chassis, rail 

Avoiding the Ever-Present Danger of Unseen Externalities 

Having mapped these six vectors, we are now in a better position to articulate and advance a successful plan of attack to address (and in the future, prevent) port gridlock and other supply chain risks.

Due to the interconnected nature of each vector and accessory challenge, great care must be taken to avoid creating unseen externalities — adverse second-and third-order consequences. Moreover, this effort requires centralized coordination with forward-thinking supply chain leaders in the private sector.

Portions of the plan that follows have already been executed in LA and Long Beach ports—finding a sustainable way forward will require tactical interventions and a systemic strategy. 

A Plan For Addressing and Preventing Port Gridlock

OBJECTIVE: Reduce terminals’ constraints and stakeholders through scaling import/exports operations into differentiated eddies of activity. Boost volume of operations personnel by lowering the regulatory bar for risk and accelerating equipment churn. 

EXECUTION: Activate NIMS by Declaring State of Emergency

  • Appoint Incident Commander and select external and internal communication officer and safety officer
  • Install leaders in Ops, Planning, Logistics, Finance, and Administration across municipal, county, state transport/infrastructure, and law enforcement domains
  • Incentivize manpower across warehouse, parcel, and carrier. 
  • Deploy National Guard to shuttle and sweep empty containers
  • Institute ban to suspend demurrage and detention charges for X days, with a $1,000 cap for outstanding containers
  • Institute Defense Production Act to secure raw materials and production for new North-American built chassis and containers
  • Suspend tariffs for X days on new, overseas-originated chassis
  • Dispatch National Defense Reserve Fleet ships under MARAD RRF or retention status

Were this plan put into play, it could function as an operational experiment upon which hypotheses could be tested, insights gleaned, and new learnings applied in the service of a more secure supply chain future.

The Need for a Longer-Term Vision

Successfully running this experiment would require nothing less than a partisan cease-fire and longer-term vision that transcends short-term profit motives, labor struggles, and career politicking. The name of the game here is good faith combined with innovative adaptation and concerted cooperation. At Pivot, this approach is part and parcel of our one-source, client-first business model. Although at this time almost all companies are vulnerable to supply chain disruption, we help our clients mitigate these challenges and achieve successful product launch in multiple ways, including: 

If you’d like to learn more about how Pivot can help you advance your market position and grow your business, contact us today for a no-obligation consultation. 

We look forward to working with you!