[HN Gopher] Flexport CEO on how to fix the US supply chain crisis
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Flexport CEO on how to fix the US supply chain crisis
Author : atlasunshrugged
Score : 55 points
Date : 2021-10-22 14:10 UTC (8 hours ago)
(HTM) web link (twitter.com)
(TXT) w3m dump (twitter.com)
| remarkEon wrote:
| I'm not sure I agree with the conclusions in this thread.
|
| >It seems that everyone now agrees that the bottleneck is yard
| space at the container terminals. The terminals are simply
| overflowing with containers, which means they no longer have
| space to take in new containers either from ships or land. It's a
| true traffic jam
|
| This seems like definitely _not_ the real bottleneck. You have to
| ask yourself, "why is there no space to put new containers" and
| the answer is (probably) "well we don't have enough trucks to
| move the ones we have off the docks". Why don't you have enough
| trucks? This is where the root cause for the bottleneck probably
| splits. I'm speculating here, but we either don't have enough
| physical trucks (I doubt this) or we don't have enough labor to
| load the containers on the trucks and actually drive them off the
| dock.
|
| Which is probably the most important question: why don't you have
| enough labor? I can venture a guess[1].
|
| >Port truckers are typically independent contractors, without the
| benefits and protections of unionized transport sectors or even
| major companies with shipping divisions, like Amazon.com Inc.
| _Their jobs require them to line up for hours to pick up cargo,
| and they're paid only when they move it._ [Emphasis mine]
|
| >"The port truck driver, for decades now, has basically been the
| slack adjuster in the whole system," said Steve Viscelli, an
| economic sociologist with the University of Pennsylvania who
| studies labor markets and supply chains. The entire system, he
| said, is built around free labor from truck drivers as they wait
| for containers.
|
| Cut checks to these people, and get those containers off the
| docks. I feel like we're living through some Black Mirror version
| of _The Wire_ Season 2.
|
| [1]https://www.bloomberg.com/news/articles/2021-10-21/biden-
| tac...
|
| Edit: added the larger context for the Bloomberg article quote
| vilppuvuorinen wrote:
| Every available chassis and inch of yard space is filled with
| empty containers. Maybe the labor deficit is in the production
| of exportable goods that would turn the empty containers into
| full containers on their way out of the docks.
|
| There's an ongoing world wide (minus some regions) container
| shortage going on at the same time.
| fulafel wrote:
| Lots of (most?) places have permanent imbalances in # of full
| containers imported vs exported, it just means empty
| containers are shipped out or in.
| qeternity wrote:
| No, this is not the likely root cause for reasons another
| commenter notes.
|
| But I want to point something out: ports and logistics
| infrastructure are the most unionized, protected industries
| that exist. The truckers may not be, but the rest of the value
| chain is, often resulting in huge inefficiencies.
|
| You note something like truckers waiting in lines for hours but
| only getting paid when they move the goods. 1) they are waiting
| in line for hours because unions strictly control the amount of
| labor in ports (these manual labor jobs often pay low-mid six
| figures) and 2) driver's simply factor these types of costs and
| many others into their prices. Owner operators aren't paid
| hourly, like millions of other business owners.
|
| This is absolutely not where the current issues lie.
| jljljl wrote:
| I don't think this matches what the thread is saying.
| Longshoremen are highly unionized, but they are not the
| bottleneck -- they are blocked because they have nowhere to
| put the containers they unload.
|
| Fixing the problem requires identifying somewhere to place
| the empty containers, and arranging transport to move those
| containers out as quickly as possible
| qeternity wrote:
| I'm not saying it's the problem now. I'm saying it's been a
| problem in the last.
|
| But the current problem is absolutely not due to truckers
| being non union.
| spiffytech wrote:
| > Why don't you have enough trucks?
|
| This is addressed later in the thread. Normally, many trucks
| haul containers to their destination, unload the container,
| then return it empty to the port, pull it off the trailer, and
| haul away another loaded container. But the port is too full to
| accept empty containers, and zoning laws mean truck companies
| have already maxed out their own container holding areas. This
| leaves enormous numbers of truck trailers sitting idle, waiting
| for somewhere to put the empties they're holding before they
| can pick up more goods to haul.
| nradov wrote:
| Would it make sense to clear the jam by scrapping some of
| empty containers for steel recycling?
| more_corn wrote:
| No. Those containers are needed. Scrapping them would cause
| a shortage of containers bottleneck two weeks after
| clearing this bottleneck. We simply need to take the
| containers off the trucks, but are not allowed due to
| zoning.
| remarkEon wrote:
| I agree with you, some emergency zoning changes need to
| happen, but my inclination is still to think that'll end up
| being a short term bottleneck and it'll move further down the
| supply chain when/if that happens. Needs to be an all hands
| on deck (no pun intended) approach.
| more_corn wrote:
| Absolutely, clearing a bottleneck shifts the bottleneck.
| Our options are 1) Do nothing and let the current situation
| continue to deteriorate 2) Clear the existing bottleneck
| and then clear the next one.
| bsder wrote:
| Erm, then pay some truckers to haul empty containers to some
| space in the middle of Arizona, Nevada, Texas, Idaho, Iowa,
| etc.?
|
| If the problem is empties clogging things up, move the
| empties. America isn't exactly short of empty space without
| zoning restrictions. In a week, the yards will be empty.
|
| This seems like a problem that money can solve. The fact that
| money isn't solving it is _extremely_ suspicious.
|
| Either it means that we don't have enough truckers because
| they're treated and paid like shit or it means that somebody
| is making money on things being clogged.
|
| Why are the capitalists all running to the government to
| break regulations instead of throwing money around? Things
| that make you go "Hmmmmm."
| edmundsauto wrote:
| Doesn't the thread say that there is nowhere to unload
| containers to, even if there was labor? That seems like what's
| causing the truck shortage - it's not a truck shortage, it's an
| empty truck shortage.
| remarkEon wrote:
| I think that point in the thread was really about the lack of
| chassis on which to move the containers. That part I'm
| inclined to agree with to a certain extent, but then you're
| back to asking why there aren't enough chassis, and I'm back
| to asking why there are still full containers on the docks
| that can accept stacking empties higher than 2x.
| jljljl wrote:
| It sounds like the chassis traditionally will arrive with
| an empty container, and then swap it for a full container.
| They can't do that now if here isn't a place to drop the
| container.
|
| Temporarily lifting the zoning restrictions + employing
| chassis solely to move containers out of the yard (instead
| of swapping them for empties) seems like the fastest fix
| GaryTang wrote:
| > He's not allowed by the city of Long Beach zoning code to store
| empty containers more than 2 high in his truck yard. If he
| violates this code they'll shut down his yard altogether.
|
| Anyone here surprised? The little things add up, multiply this
| code by the hundreds of others and you have a supply shortage.
| mikewarot wrote:
| >Leadership is the missing ingredient at this point.
|
| Political will has evaporated in the age of polling driven
| decisions. The Donor class sees actual leadership as dangerous to
| them, they still remember the betrayal of FDR and guard against
| it.
|
| I suspect some huge profits are being made by some while the
| supply chain remains effectively strangled, so why would they
| want it fixed?
|
| Things have been going down hill since the Clintons and
| "triangulation" - their new Democratic strategy of engaging in
| strictly performative gestures for the working class, while
| courting the donors behind the scenes.
| missinfo wrote:
| Even worse, they are increasingly deferring to Twitter.
| more_corn wrote:
| To be fair, some really good ideas came out of this
| particular Twitter thread.
| AnimalMuppet wrote:
| There's some good stuff in here, but also some bad ideas. The bad
| ones:
|
| - Bring the military and National Guard container chassis to
| relieve the ports. That works, _unless there 's a situation where
| the military or National Guard need them_, in which case it could
| be catastrophic.
|
| - Force railroads to haul to this one particular new site. First,
| I kind of bristle at the word "force". That's not how it works in
| a free country. Second, there is no unused facility available
| that has the rail bandwidth to handle the traffic level that he's
| talking about. Third, the containers were intended to go to
| Dallas (the example he used), not to this new site 100 miles from
| LA. How and when do they get from there to Dallas?
| TheBill wrote:
| Theres an AFB outside of LA with proper rail siding. He
| identified it & facilities in thread.
|
| Railroad are a regulated monopoly. DOT/FRA can mandate service
| & regulate rates (either for freight or using their track) to
| prevent one carrier from making movement impossible. If DOT/FRA
| do it right they'd economically incentivise the short haul.
| AnimalMuppet wrote:
| > Theres an AFB outside of LA with proper rail siding. He
| identified it & facilities in thread.
|
| It exists. It has a rail siding. Can it handle the throughput
| that we're talking about? Air force bases have rail service,
| but they don't have the infrastructure for high-volume rail
| traffic.
|
| > Railroad are a regulated monopoly.
|
| Railroads are regulated, but are not a monopoly. (Though a
| railroad may have a monopoly on _rail_ service _to a
| particular customer_ , that's not the usual definition of a
| monopoly.)
|
| > DOT/FRA can mandate service & regulate rates (either for
| freight or using their track) to prevent one carrier from
| making movement impossible. If DOT/FRA do it right they'd
| economically incentivise the short haul.
|
| I believe that the STB is the one that regulates rates and
| service (and much less stringently than the old Interstate
| Commerce Commission did pre-Staggers Act deregulation). DOT
| is more about regulating safety.
|
| Anyway: Could it be done? Yes, maybe, to some degree. Could
| they move enough containers to unblock the ports in a finite
| amount of time? I'm much more skeptical. It's not a matter of
| the rates and regulation, either - it's a matter of building
| track and other infrastructure at the AFB.
| throwawaysea wrote:
| Does this person actually know what the problem is? For example
| see https://news.yahoo.com/lazy-crane-operators-
| making-250-20010.... The symptom might be not enough space for
| containers, but the root cause could be something a few degrees
| removed, or a combination of things.
| coolso wrote:
| It feels like everyone is trying real hard to come up with
| solutions that just continue the status quo of having all of our
| goods produced in China.
|
| Just 20-25 years ago we were still making a lot of things in the
| US. But the American worker, and economy, was sold out to cheap,
| high-polluting, IP-stealing, yes-lets-ship-it-2000-miles-instead-
| of-making-it-in-the-US Chinese labor and manufacturing at the
| benefit of the CCP but everyone else's expense.
|
| This is just the tip of the iceberg. This wasn't even a direct
| supply chain disruption and it's hitting us hard. Imagine if we
| ever had one, and there's no evidence to suggest we won't again.
| We're dependent on... China of all places for everything?
|
| Why can't we focus our brainstorming sessions on bringing
| manufacturing back to the USA? Why is this not a major talking
| point? Americans have been polled and across the aisle people
| prefer made in the USA.
|
| Let the CCP take care of its own people. It certainly thinks it's
| system is the right way.
|
| It's madness and it's sad. Every corporation and politician that
| had a hand in this ought to be ashamed. Every media outlet that
| ignores it ought to be ashamed too.
| remarkEon wrote:
| Agree. Almost all the discourse I see on this topic is really
| just a band-aid for what are actually much deeper and systemic
| problems with global supply chains that are just too damn
| optimized for JIT and cost-reduction. You can find lots of ink
| spilled over "MBAs" and "shareholder" or "managerial"
| capitalism, but functionally in order to fix this we actually
| have to reorder how industry is situated in the United States.
|
| If there ever was a direct supply chain disruption (intentional
| or not), the US would be in a _much_ worse spot than we are
| right now. Everything from semiconductors to nuts and bolts
| would be a problem (some more than others). There isn 't a
| single issue more important to national security right now.
| jdhn wrote:
| >across the aisle people prefer made in the USA.
|
| They may say this, but when push comes to shove, people simply
| don't buy a lot of consumer goods that are made here.
| coolso wrote:
| That's because right now, it's significantly more expensive.
| But given more equal pricing, most people would of course buy
| USA-made goods.
|
| Right now the system is destroyed so of course made in the
| USA is going to be significantly more expensive until the
| system can be resurrected.
|
| But I assure you a supply chain disruption will be
| significantly more costly to society and not just
| financially.
| AnimalMuppet wrote:
| Well, _right_ now, "expensive but I can get it" beats
| "cheaper but sitting on a boat outside Long Beach". Problem
| is, nobody thinks this is going to last long enough for
| everyone to invest in US manufacturing.
| nradov wrote:
| We still make things in the US. Manufacturing revenue has been
| consistently increasing. However manufacturing as a share of
| GDP has fallen as other sectors grew faster. And employment has
| fallen due to automation and process improvements.
|
| https://www.macrotrends.net/countries/USA/united-states/manu...
| rsj_hn wrote:
| You have to be really careful when citing numbers like these.
|
| A typical American "manufacturing" firm primarily does design
| and supply chain management, with the actual physical task of
| production and assembly outsourced. So if they can get the
| foreign production for $100 and they sell the product for
| $300, then their design and supply chain management is worth
| $200 and we say that the US has a strong manufacturing base
| because of that $200 contribution to GDP.
|
| Thus Boeing and Maytag are considered US manufacturers,
| because they are American companies that produce physical
| products. But both of these companies outsource most
| production. But as long as they earn a big spread between
| their costs of outsourcing and what they sell the finished
| products for, it will appear as though US manufacturing is
| strong.
|
| Therefore the US is at incredible risk in its manufacturing
| base, with the contributions to GDP held together primarily
| by preventing IP theft. The moment the suppliers can set up
| their own shop or sell enough IP to local rivals, they will
| be able to sell the identical good for $150, undercutting the
| US manufacturer and then they have to either exit the market
| to some other product line where IP protections are stronger
| or just go out of business.
| kmlx wrote:
| > Why is this not a major talking point?
|
| because we live in a globalised world. your phone would cost
| 10x what it costs now if you moved production to the US. that
| would mean lots of people without phones, so a much smaller
| economy. no one wants that.
|
| > Americans have been polled
|
| ah, polls :)
|
| > across the aisle people prefer made in the USA
|
| as a European, i have always associated American made with low
| quality, cheaply made, bad taste and expensive. American
| products are to be avoided at all times. this has been the case
| for decades and decades, before the move to China. at least now
| even American companies realised this and moved production to
| far superior Chinese manufacturers.
| systemvoltage wrote:
| Be careful of European Exceptionalism that reverberates same
| uninformed thinking American Exceptionalism was known for.
| Usually, full of prejudice, glib pride and delirious
| nationalism.
| kmlx wrote:
| i am very careful. i prefer any other nations products.
| japan, china, almost any country in europe, lots in south
| america. but the US has constantly disappointed. and not
| only recently, but throughout the decades.
| LurkingPenguin wrote:
| Can you name Chinese products (made in China by and for
| Chinese companies -- not American or European companies)
| that you consider to be of high quality? Same for South
| America.
|
| And what American products have "constantly" disappointed
| you?
| [deleted]
| cr1895 wrote:
| > as a European, i have always associated American made with
| low quality, cheaply made, bad taste and expensive. American
| products are to be avoided at all times.
|
| What informs that viewpoint? It's really foreign to any
| perception I've ever heard from anyone or experienced myself.
| kmlx wrote:
| weird. i don't know anyone who has had a good experience,
| or who prefers american made products. cars, food, fashion
| etc. they represent bad taste and poor quality. i thought
| this was known globally. like how germans are technical.
| one of those things that are part truth, part myth.
|
| where i come from if someone wants great quality we buy
| european, japanese or chinese products.
|
| whenever i travel to different continents for work, no one
| i talk to wants or buys american made anything. it's again,
| european, japanese or chinese.
|
| of course software is different, due to its globalised
| nature.
|
| and of course sometimes you buy american branded products.
| if you can't find anything else, you kind of have to settle
| with the american product.
| LurkingPenguin wrote:
| I have had exposure to industrial equipment sales in
| Asia, Latin America and the Mideast. American-made
| equipment generally has an excellent reputation. Cost,
| however, is often an issue.
|
| It would be helpful if you were more specific. Where do
| you come from? What types of products are you talking
| about?
| cr1895 wrote:
| > one of those things that are part truth, part myth
|
| Yeah perhaps true. But then I'd say that it's essentially
| a meaningless conclusion to hold as some universal truth.
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