Lately, we are seeing pictures of empty shelves contrasted with pictures of full container ships floating in the ocean near the huge ports of Los Angeles and Long Beach, waiting to be unloaded. What is the problem? Why can’t the ships dock, disgorge their containers, and have the products distributed?
First, we wouldn’t have this problem if we had not off-shored our manufacturing to China, Taiwan, South Korea, Vietnam, Japan, Indonesia, Malaysia, etc. We buy about $2 trillion dollars worth of goods from other countries every year, almost $1 trillion a year from China. Most common consumer items—the stuff you buy in Wal-Mart—are now made in China. That means the goods must be shipped over here from over there.
Then when it gets here, we must unload the ships and put the containers on trucks and rail cars to distribute them across the country. The problem is not the ports or the longshoremen, who are working as hard as they can.
The problem is that there are not enough trucks that comply with California’s insane environmental policies to haul the goods away from the ports. The biggest bottleneck is at the ports of Los Angeles and Long Beach which (for the geographically challenged) are in California.
On October 16, 2020, the U.S. Environmental Protection Agency began enforcing regulations on big rig diesel engines issued by the California Air Resource Board (CARB), fining three trucking companies a total of $417,000. This had the effect of shutting down any truck (big rig, semi, tractor-trailer, whatever you want to call them) that did not comply with California’s very strict emission standards.
As a practical matter, this means that most of the big rigs on the road cannot pick up freight at the ports of LA or Long Beach. Older trucks cannot pick up or deliver containers at those ports. This rules out almost half of corporate fleet big rigs, and most of the owner-operators or independents.
In theory, independents could buy new trucks that are compliant, but California is also scheduled to begin phasing out deisel-powered big rigs in 2030, in favor of electrically powered rigs. So who would invest in a new truck, which might cost up to $175,000, when it might be outlawed before its economic life ends? Certainly not independent owner-operators, who cannot afford to eat big losses.
A few days ago, the White House staged some Kabuki theater in California. Joe Biden met with the heads of the Ports of Los Angeles and Long Beach (Gene Seroka and Mario Cordero, respectively), and the International Longshore and Warehouse Union (ILWU). They announced that they would be operating the ports 24/7, adding new off-peak nighttime shifts and weekend hours, nearly doubling the hours of operation. But, of course, operating the ports twenty-four hours a day, seven days a week will not help at all. The containers will just pile up on the dock, because the trucks necessary to haul them away have been outlawed.
Some transportation companies have started using emission-compliant rigs to haul containers to the California state line, and then transfer the containers to non-compliant trucks to deliver items to the interior of the country. This will help at the margins, but there just are not enough compliant trucks for this to solve the problem.
Industry insiders became aware of a looming problem several years ago, when the California Air Resource Board (CARB) announced the new environmental regulations. Several massive multinational corporations with highly complex just-in-time supply chain operations immediately recognized the issue and started planning to divert their goods to other ports. This was a very expensive shift, even for such massive corporations as Amazon, Wal-mart, Samsung, The Home Depot, and Target.
These companies are heavily staffed with experts in logistics and transportation, but there is only so much they can do. When ships from Asia must be diverted from California into the Gulf of Mexico to Houston, New Orleans, Mobile, and Tampa, or even to ports on the Eastern Seaboard, they must pass through the Panama Canal, which doubles the time and the cost of shipment.
Smaller importers cannot control their part of the supply chain on goods coming from Asia to the West Coast. Unlike Amazon, they cannot hire entire ships—indeed entire shipping fleets—with thousands of containers, and have them go where they direct. Those wholesalers, brokers and smaller companies are stuck waiting for their containers to get through the bottleneck in Southern California.
Does California really need such draconian restrictions to have breathable air? No. The thick smog and smog alerts of previous decades were largely a memory by the late 1990s and early 2000s. The air quality in the Los Angeles basin is generally good. These regulations are driven by fears of anthropogenic climate change and a general antipathy toward fossil fuels.
This disruption to the supply chain is totally unnecessary; it is a deliberate strategy to impoverish human beings by forcing humanity into using less energy-dense fuels, and less efficient and economical energy systems. Higher energy cost is a regressive tax that obviously hits poorer people harder than it hits the rich. It hurts the poor and the working class. It is the very definition of misanthropy.
“They that go down to the sea in ships, and do business in great waters; These men see the works of the Lord, and his wonders in the deep. For at His word the stormy wind ariseth, which lifteth up the waves thereof. They are carried up to the heaven, and down again to the deep.” Psalm 107:23-26.