2011 L.A. container shipping breaks U.S. record
As an established leader in the container export and maritime trade industry, the Port of Los Angeles recently set a new record by processing and exporting 2.11 million outgoing containers, nearly a 15 percent increase, in 2011. This record means the Port is officially the first harbor in the nation to break the 2 million mark in a fiscal year, according to port officials who have released year-end statistics reports.
The Port’s next-best record set in 2010 – 1.84 million containers shipped – was smashed when a surge in December resulted in 176,531 containers moving through the busiest seaport in the U.S. In 2011, California United Terminals relocated from the Port of Long Beach to the Port of Los Angeles, further boosting container handling numbers.
The increasing need for distribution of U.S. goods to overseas consumers comes as a welcome sign in a time when a flagging economy is now an established global concern. A shift in global trade patterns has challenged the maritime shipping market and the ability for the Port to effectively handle the staggering number of exports means it is adapting well to the changes, experts in the field point out.
To further encourage U.S. businesses to export their products overseas through the harbor, the Port of Los Angeles implements a TradeConnect program which helps put suppliers in touch with potential buyers. The program covers a range of tips and instructional workshops on everything from the basics of commercial transaction, documentation and logistics, to finding overseas markets and ways to effectively engage with potential clients.
Handling 40 percent of the maritime shipping imports from Asia, the Southern California region moves the majority of goods for the industry, and the logistics industry in the region employs roughly 500,000 workers. In 2011 alone, the Ports of Los Angeles and Long Beach processed roughly 14 million containers, a slight dip from 14.1 million containers the previous year.
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Relatively modest growth is expected for world trade in 2012, and city officials don’t view the numbers to mean it will be smooth sailing from here on out.
“We're fortunate to have stronger year-over-year results in 2011,” Los Angeles Mayor Antonio Villaraigosa said Tuesday in a statement to the Los Angeles Times, “but we are not resting on our laurels as the nation's premier trade gateway. That's why we are investing $1.5 billion in capital improvements over the next five years.”
Los Angeles is also looking to increase its import/export industry overall by breaking into the perishable air freight sector. The city recently invested in a new cold warehouse to handle perishable fruits and vegetables, unveiling the structure in late November. The 16,000-sqaure- foot warehouse, located near Los Angeles International Airport (LAX), will allow the region to compete with Miami, which has been an established leader in the market for years.
“This is something that Los Angeles has got to do if it wants to attract this kind of business,” Jock O'Connell, international trade advisor for Beacon Economics, said to the Times in November.
Honing their competitive edge in areas outside maritime shipping and investing in capital improvements means that Los Angeles will continue growing in the export industry.
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector