Factors in the Supply Chain Snarl

You might be interested in this letter from a veteran truckdriver, published at the Brownstone Institute. It provides some details that may be factors in the supply chain snarl we’re all experiencing. His basic message is that California regulations are a major part of the problem.

16 comments… add one
  • Drew Link

    There are two points to be made.

    As I pointed out several posts ago, and Jan reiterated, CA regulations are a major problem. I saw a citation that as many as 50% of the trucks would be precluded – or require a very costly retrofit – to operate under regulations implemented just this year. Hence, the product is here. Well, sitting on a boat outside of Long Beach or LA. The truckers reference to transfer to state borders was also referenced in the articles I read, and reports from our portfolio companies. Congratulations Gavin Newsom.

    As far as pay goes, once again these tugs of war go on every day. If truckers withhold their labor then either the fleet managers will up the pay, or, consumer demand just will not support the increase in transportation costs in final margins and price. This is nothing new.

    Of the major ports – LA/LB, NJ, Sav, Hou and the Seattle/Tacoma nexus, all had been growing their TEU’s at a 5 yr cagr of 3-6% prior to the pandemic. In 2020, of all years, TEU’s grew 3-8% at these ports, driven largely by end of year “catch up.” So much for the BS that our current 2021 problem is due to such a robust economy. The ports handled the catch up pretty well. There clearly are other factors at work. And the principle ones are getting product unloaded and distributed within the US. That’s primarily covid hysteria and regulatory policy. You’re doin’ a heckavu job, Joey.

    But I’m not worried. We’ve got South Bend Mayor Peat at the ready, just as soon as he deigns to actually go to work that is.

  • steve Link

    Actually, he doesnt weight or provide numbers. The only really number he gives, and it is clearly just his estimate, is that 90% of trucks cannot go to the ports because they are not union.

    There ought to be some real numbers to look at rather than just people pushing their agenda. From what I can find it looks like the ports are handling record numbers of containers. The increase in volume looks to be real. How many trucks are making it to the ports vs how many are needed? There are letters by other truckers saying the problem is that containers are making it to the warehouses but there are no trucks to distribute away from warehouses and that is why there is a back up.

    If the problem is mostly trucks, which you now seem to believe, then why so many articles claiming we need truckers? There are tons of articles years going back on trucker shortages. This one from last year said we lost many truckers last year.


    Anyway, would be nice to see some data driven arguments rather than just ones based upon feelings and personal beliefs like in the letter you cite.


  • I don’t necessarily believe “the problem is mostly trucks, which you now seem to believe”. I simply thought it was an interesting letter which deserved more eyeballs.

    I think it’s multi-factorial and I think at least one component in the solution should be more domestic and/or nearshore production. I would add that widely distributed additive manufacturing would completely transform the discussion.

  • PD Shaw Link

    Tyler Cowen linked to this tweet thread from someone in the freight industry who toured the Long Beach port from seaside. He says the issue is no space at the terminal yards, so nothing is coming or going. Of the hundreds of cranes, he saw seven operating. Most of the space is filled up with empty containers, so trucks arriving with an empty container can’t pick up a container. Long Beach (and LA) zoning regulations preclude stacking more than two empty containers.

    His five point plan:

    1. Executive order to temporarily (say 120 days) allow stacking six high. Some push back in the MR comments about federal authority, but I suspect there is more legal authority over harbors than is suspected, but in any case, if the zoning restrictions are significantly contributing to the bottleneck, then legal remedies should be pursued as they exist.

    2. Deploy available military and national guard chasis for temporary use at terminals.

    3. Establish a temporary container yard at a military property within 100 miles near an inland rail head.

    4. Require railroads to haul containers directly to this site before they can make longer cross country hauls. Maybe, persuade.

    5. Bring in barges/ smaller vessels to haul containers to nearby ports that have capacity.

    My recollection from my stay in Savannah a few years ago was that stacking containers six high was common. Certainly felt like there was a log more shipping than the last time I visited. Stacking would have the possibility of tripling the space. The rest appears to be about short distance dispersal, getting containers out of the maw of LA / LB population centers. East coast has a lot of inland ports that serve the purpose of backing up the space constrained traditional ports.


  • Grey Shambler Link

    These are all good observations and possibly areas where the Federal government could be of support once the Secretary of transportation returns from maternity leave.

  • Sounds like some sensible steps to me, PD. Thanks for bringing those to our attention. That could explain the statistics I’ve linked to saying that fewer TEUs were being processed than last year at this time.

  • steve Link

    Thanks PD, nice twitter chain. Several people who claim to own or work for trucking companies joined in to say they had lots of chassis tied up with empty containers.


  • Jan Link

    Numbers and stats also push agendas, as they can be conflicted, under or over-weighed. Consequently, I will take real life testimonies, experiences any day over the filings of a bureaucrat. That’s why I enjoyed reading the letter by that veteran truck driver.

    Over-regulation, after all, has long been a scourge on smaller businesses, putting undo hardships on their ability to break even let alone prosper, just because of the ever-present clipboard of a bureaucrat baring down on them. CA truck drivers are only one segment of commerce being imposed upon by over zealous Democrats in this state – whether it involves crushing gig workers, mandates on small business owners, or anything augmenting expensive green policies at the expense of efficient, cost-effective policies.

  • steve Link

    Guess you wont like all the numbers showing California is doing pretty well economically.



  • jan Link

    I guess that’s why so many people are
    leaving the state, with more wanting to follow.

  • Drew Link

    “My recollection from my stay in Savannah a few years ago was that stacking containers six high was common. Certainly felt like there was a log more shipping than the last time I visited. “

    They have an ongoing dredging program so they can stack more containers. They also built additional facilities a couple miles up the river.

    Most things in the real world are multi-factorial. But there usually are dominating variables. Trucks are the primary problem right now.

    The notion that analyses or studies or expert opinion are not subject to biases or error or fraud is breathtakingly naive. Look at global warming and Covid. I’m also reminded of Peter Lynch, the former chief portfolio manager of the famous Magellan Fund, who noted that one of his favorite techniques for generating or confirming investment ideas was to go out and walk among the people, looking with his own eyes.

  • steve Link

    Which worked for Lynch since he wasn’t generally going with pre-conceived ideas and biases. That meant he wouldn’t focus on one area to the exclusion of all other problems. Ryan Peterson who wrote the twitter chain is the CEO of a freight company so I would expect him to have some expertise in evaluating the problem as a whole and not just use it as an excuse to promote his ideas when he writes into a political blog. He has money at stake. That doesnt mean we accept his explanation data free. The notion that we would accept any one person’s opinion as fact is naive especially when it is evidence free.


  • Trucks are the primary problem right now.

    Perhaps that’s true. I just don’t know. I think it’s worth considering which is the factor easiest to change?

    That doesnt mean we accept his explanation data free.

    It also doesn’t mean that he’s wrong.

  • steve Link

    “It also doesn’t mean that he’s wrong.”

    But easy to confirm in the case of the CEO, Peterson. Take pictures of the containers. Are they all stacked 2 deep? Confirm the local law that only allows 2 deep stacking. Confirm with trucking agencies how many empty containers they have sitting on a chassis. Should be doable in a few days. Not real complicated analysis. The true value of these kinds of letters and twitter chains is that they help tell us where to look.


  • PD Shaw Link

    Apparently Thursday night the Long Beach city council provided some form of temporary relief to allow empty containers to be stacked four high, and five with some additional safety measures.

  • PD Shaw Link

    . . . or maybe it was Friday evening.

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