If you go ashore in Southern California and look out to sea, you can easily find dozens of container ships waiting to go into port and unload your cargo.
The Wall Street Journal titled, “California Ports Jost as Cargo Piles Up How to Resolve Delay.” Subtitle: “U.S. shipping operations remain closed because ports, truck drivers and warehouses don’t get enough staff or agree on 24/7 operation.”
It has happened repeatedly over the years when port unions go on strike. This time there’s a different reason: supply disruptions from the COVID-19 lockdowns last year, and possible new lockdowns.
Randall O’Toole told me, “Even after everyone’s back to work, it’s going to take a long time to clean up.” He is a Senior Fellow of the Cato Institute working on issues of urban development, public land and transportation.
He gave this analogy: You’re driving on the freeway, with traffic moving at 60 mph. Then it goes bumper-to-bumper. You have never even seen the reason for the recession. But someone ahead of you had to slow down – perhaps in front of a car to avoid a hare jumping. That first car was going at 60 mph, but at a slower 59 mph. Then the car behind him had to slow down to 58 mph. Third car 57 mph. And so on.
“Everybody’s all jammed,” he said. “But eventually it clears up. The same thing happened with ports.”
Last year, the COVID-19 lockdown forced people to cut spending, hence the need for less imports into ports. The lockdown is largely over (we hope), demand has picked up, but the ports’ peak capacity hasn’t expanded. So container ships remain offshore, waiting to go into ports and reduce increased demand.
This is similar to the problem of rental cars. During peak COVID in 2020, rental companies were practically giving away cars. Hertz went bankrupt, but Avis “tried hard” (as its old ad put it), and didn’t. Most rental companies dump a large number of vehicles in the rental market.
Now, rental car prices have “skyrocketed,” according to the Detroit News, “as the pandemic causes supply shortages.” “Used car prices may not return to normal until 2024,” Cars Direct reported.
California isn’t the only region hurt by port problems. The Port of New Orleans reopened on September 2 after being closed for three days during Hurricane Ida. “Dozens of cargo ships waited off the coast of New York amid a shortage of port staff and increased demand for cargo,” Business Insider reported on September 26.
The $3.5 trillion infrastructure bill—in this case causing overcrowding in Congress—could provide some relief in the future. The final number, including the total, is undetermined. But on September 30, Transportation Topics wrote, “Specifically, the budget reconciliation bill will dedicate $2.5 billion to the Maritime Administration for supply chain resilience, congestion reduction and development of offshore wind infrastructure at ports, among other enhancements.”
However, O’Toole cautioned that Congress has a habit of spending money on the wrong thing.
“The whole impetus for the infrastructure bill is that we have a crumbling infrastructure,” he said. “This is largely not true. Private infrastructure is largely in good shape. Tax-supported infrastructure is in bad shape. Members of Congress want new infrastructure, not maintenance of existing infrastructure.”
Regarding port money, he said, “I doubt a lot of that money will go to ports on the Gulf Coast. Because the expansion of the Panama Canal has allowed a lot of shipping to go to Ft., rather than the West Coast. Lauderdale or New Orleans. Those places will ask for money for the port expansion.”
From 2009 to 2016, the new Panama Canal project, called the Expanded Canal, significantly increased the size of the container ships it could handle. This allowed greater shipping to flow directly from Asia to the east coast of the United States, avoiding the west coast and transshipment across the continent.
The expanded canal intensified competition between the West Coast ports and those on the East Coast.
O’Toole said the best solution would be to move government-run transportation projects, such as airports and seaports that rely on tax money, to private facilities on a user fee basis. Private facilities must maintain their infrastructure to maintain customer satisfaction. Most of America’s state-run airports have become so dysfunctional that they have become an international embarrassment.
But privatization is something for the future. For now, ships waiting at a port at sea are another COVID-19 result.
This News Originally From – The Epoch Times