Opinion

State should do more to unclog port congestion

The tugboat Sandra Hugh pushes a cargo ship into the crowded Port of Oakland. (Photo: Sheila Fitzgerald, via Shutterstock)

If the Grinch is attempting to steal this Christmas, he is doing so under the guise of supply chain disruptions and congested ports. The attention-grabbing headlines asking, “Who Can Save Christmas,” usually top stories about children finding the right toy under the tree Christmas morning.

But the port congestion crisis has many more victims, including small businesses who rely on the holiday season for healthy business returns.

With unfortunate and ugly timing, this new supply-chain problem falls on the back of small businesses trying to rise from the devastating consequences of the pandemic.

In the latest COVID-19 poll of its small-business-owning membership, released this month, NFIB found 62% of small-business owners saying supply-chain disruptions are worse now than three months ago, and 90% are expecting the problem to continue for the next five months or longer.

At a recent Fed Listens session, U.S. Federal Reserve Chairman Jerome Powell said “I’ve never seen these kinds of supply-chain issues, never seen an economy that combines drastic labor shortages with lots of unemployed people. … So, it’s a very fast changing economy. It’s going to be quite different from the one (before).”

With unfortunate and ugly timing, this new supply-chain problem falls on the back of small businesses trying to rise from the devastating consequences of the pandemic.

Of course, all businesses are affected by the trials and tribulations that have required ships to lay at anchor for days stacking up at America’s ports. Not enough storage, not enough staff, not enough truckers, and more contribute to the current port congestion crisis. However, big business has greater resources, more clout and heavy buying power to have their shipping needs taken care of first.

As with many issues, California is in the center of this storm. Los Angeles and Long Beach ports receive about 40% of all containerized cargo for the United States each year.

Small business is not so fortunate.

Shipping costs have soared. A July Wall Street Journal article, citing a source, stated, “The average price to ship a container from China to California is now at $6,043, up 43% since the start of this year and 344% since the start of 2020.”

Small businesses don’t have the money to keep up with that type of ballooning cost.

It would be a mistake to think the supply chain disruption is only about the holiday season. Everyday products consumers are looking for are being held up by the port congestion.

As with many issues, California is in the center of this storm. Los Angeles and Long Beach ports receive about 40% of all containerized cargo for the United States each year and are responsible for 30% of containerized exports. In other words, what happens to the California ports affects the whole national economy.

A proposal is allow independent truckers to operate in and through California until the supply chain has normalized.

Government has a role in easing the pressure on the shipping industry. President Biden announced his transportation department is making sure ports are operating around the clock.

But that’s just one piece of the puzzle.

Easing regulations on shipping issues will help speed the process. To that end, Gov. Gavin Newsom issued an executive order asking state agencies to find container storage space on government property. He also asked that temporary exemptions for truck weight restrictions on freight routes be put in place so that goods can be transported more quickly.

Not a bad first start but much more needs to be done. NFIB and 18 other business groups sent an October 19 letter to the governor detailing eight other actions he could take to break the supply-chain clog, including suspending Assembly Bill 5 and allow independent truckers to operate in and through California until the supply chain has normalized.

“Let’s be clear, we are not asking for your leadership in order to ensure there are toys on the shelves for Christmas; we are asking for your leadership in order to ensure working families have access to affordable medical supplies, diapers, and other basic necessities,” said the letter.

Editor’s Note: John Kabateck is California State Director for the National Federation of Independent Business and president of Kabateck Strategies.

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