Port of Los Angeles Head Gene Seroka on US trade imbalance



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“All I see are ships,” said Gene Seroka, general manager of the Port of Los Angeles, America’s busiest port, recently looking out over the Pacific Ocean from his office window.

The pandemic has devastated the entire global supply chain, and the evidence is piling up in the world’s crowded ports. Ordinarily, pre-COVID-19 ships were able to vape directly into ports in LA and Long Beach without waiting. On August 18, however, 32 ships were waiting at sea for an unloading point in one of the two ports.

The congestion is mainly due to the enormous volume of traffic required by ocean carriers to meet the high import demand. The Port of Los Angeles just closed its busiest June ever, seeing unit numbers up 27%. In the first half of 2021, the cargo volume in the port increased by 44% compared to 2020. Prices are exploding and the Federal Maritime Commission recently launched an investigation into price gouging. Industry experts estimate that 99.5% of all available ships are currently in service around the world.

The delays were compounded this summer by COVID-related closings of shipping facilities and a variety of climate change impacts (including forest fires that have slowed rail traffic in Canada and floods that hampered the movement of barges in Europe). Even in the United States, the world’s largest economy, overcrowded warehouses are understaffed during labor shortages. There aren’t enough long-haul truckers either, and earlier this summer several major railroads announced that they were taking a week off with new pickups after securing railroad cars for miles in the Midwest. (For a vivid and delightful example of the effects of supply chain delays on a product, see my colleague Alana Semuels’ article about ordering a stuffed giraffe for her son.)

Seroka came to TIME on Aug. 11 for a video chat about what it will take to reduce utility congestion, cybersecurity health and the cargo that unexpectedly triggered an alarm. For the sake of clarity, the interview has been compressed and edited.

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In a speech last week, President Biden said the government was following the “congestion” in the Port of Los Angeles. Did you watch the President’s comments on the port and what was your reaction?

I’ve looked at it three times. It’s positive. It’s just great to get that kind of attention from the nation’s chief executive and the people he brought on the case.

What can the federal government do to alleviate the traffic jam?

If the Minister of Transport calls you, you will likely pick up the phone and then join the meeting. They have strong convening powers to bring all of these massive interest groups together.

I understand that, in your view, some of these supply chain issues arose before the pandemic and were caused by Trump’s trade wars and tariffs. What impact has this had on supply chain dynamics?

This policy harms the American exporter and especially the American farmers because China then imposed retaliatory tariffs on our exports.

We have been beaten by every other trading nation. For example, Brazil threw us out of the game with soy. Here in the Port of Los Angeles, our export market has now declined for 28 of the last 32 months.

How has this trade imbalance affected business?

In our industry, the focus is heavily on the round-trip economy, ie I want to bring in as much on the export side as I push out. What we have now seen with the increase in imports is a ratio of 5: 1: five imports come for every export. That means our biggest export is the air.

We are exporting empty containers back to Asia so that they can be pre-positioned in the factories for the next round of imports here in the USA. That’s not efficient because you’re not getting any aerial income, is it? The railroad companies, the haulage companies, the freight forwarder and brokerage community spend a lot of time repositioning those empty boxes with very low returns.

What problems are the delays causing your customers?

The key word for this surge was Uncertainty. I’m not sure my products will hit the shelves. I am not sure how long it will take them to come to me when I buy online. I’m not sure I know when the cargo will leave the ship.

What drives that in principle?

It all starts with the American consumer. I’ve never had more things in my closet. I’ve never had sneakers before. The production of the manufacturing industry is at the highest verifiable level. You can’t keep up with incoming orders. They make as much product as they can. We’re putting it on every available ship, but we need more ships to carry that volume.

Then when it got here we saw the railroads get very full and the warehouses overflowing with stock from shopping so much overseas. We have 2 billion square feet of warehouse, from the Pacific coast to the Mojave Desert and by car.

With COVID-19, the workforce now looked a little different because we can no longer work in teams that are very close to one another. Some people got sick. Others were afraid to go to work for fear of getting sick. So we didn’t have the necessary labor on site day in and day out.

In addition, some railways took a break.

It made up about 15% of our cargo, which would rest there for a period of about seven to ten days. I understood their motivations because they are facing the same thing. Chicago has 50 miles of trains waiting to be unloaded. So much cargo is arriving and importers are no longer picking up the cargo as quickly as they used to before COVID.

So if the cargo rests longer, the next train comes, the next ship comes and everything starts backwards.

That’s a huge increase in productivity in terms of the speed at which you unload a ship. How did you do that? How did the dock workers do it?

They work an average of six to seven days a week for 18 consecutive months. You really took up the challenge. The workforce, men and women of the International Longshore and Warehouse Union, are the best in the business, and they have the ability to improve through on-the-job training to earn higher qualification certificates. And that is what we see today, all the hours that the men and women have invested to achieve these new marks are now paying off for us.

What is the highest skill level?

You start out as an apprentice, or what we call the occasional longshore member, and do pretty much anything to get to the docks. And then it goes to the people who control these very large ship-to-shore cranes, which are now over 50 meters in the air.

That is the greatest ability to place this crane mechanism 50 meters deep on a ship, connect it to a container, pick it up and bring it to a loading area for transport out of the terminal.

Are you experiencing the same cyber attacks that hit many companies during the pandemic?

We created the nation’s first port cybersecurity operations center, and today it stops 40 million cyber intrusion attempts per month. It’s twice what it was before COVID because the bad guys are out there.

What effects do you see of climate change today and how are you reacting to them?

It’s huge. Climate change is real. I’ve lived in port cities for most of my life. There is nothing I would like to see but a zero emission port complex, and that is the goal of LA Mayor [Eric] Garcetti and I have today. You still have a lot to do.

We have reduced diesel particles, the exhaust fumes from trucks, by 87% [between 2006 and 2020], and other source categories have fallen sharply, but we still have to look for greenhouse gases and we still have to find a way to get to an emission-free platform, be it battery, electric, hydrogen fuel cell or other options. We are now testing them on site in Los Angeles.

In December there was a raid by US customs officials working in conjunction with port security. that exposed a million counterfeit Viagra pills and counterfeit sneakers. How big is the concern about smuggling?

It’s a big issue. We are concerned about human trafficking, not just goods. We want to make sure the world is safe from people who want to do this type of undeclared work.

What’s the strangest thing you know that was found in a shipping container, either legal or illegal?

We did contact and non-contact radiation exams, and we had a number of containers that were pulled aside as the buttons went off. Come on and find out that it was the potassium in the bananas that triggered it.

Are you getting calls from anxious customers trying to track down their shipments?

Every minute. Every day. Every waking hour.

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