Yule Log Jam

Do you really know how goods get to your local retailer for you to purchase for Christmas? There really is a “long boat to China”, or FROM China, and it brings the pretty packages that we buy during the holidays, as well as all year long.

But that boat from China has to dock somewhere, and someone has to unload those packages, and some trucker or train has to deliver them to distribution centers and retail outlets. What we don’t realize is that we are running out of time and space to complete import business as usual, especially for the holiday crunch.

“The Los Angeles-Long Beach ports handle 43% of America’s imports.” This holiday season, 137 ships came sailing in, and only 94 of them could fit into the harbor, and some who docked had to wait as many as eight days to unload, which is twice as long as normal. These ports are the only ones large enough to handle the big ships, some with more than 4,000 containers on board. Combined, they handle “62% of all shipments to West Coast ports from Asian exporters.”
Major companies are forced to add extra days into their supply chain, or consider alternate ways to bring their parts and supplies in. “Toymaker MGA Entertainment…lost some $40 million in revenues when it couldn’t deliver its bestselling Bratz dolls on time to big retailers. Sharper Image even blamed a third-quarter loss in part on reduced inventory from the port backlog. It even cited higher air-freight costs to bypass ports.”

This season, trains were maxed out in their cargo areas, and the unions didn’t have enough people, and truck drivers just up and quit, because they were losing money while sitting around waiting for cargo to be unloaded. “The capacity of the nation’s ports, roads and rail system is nearing a true breaking point.” Train rides that used to take 36 hours now take 56, because there are not enough tracks for the trains. The increase in port volume was up three times what they had expected. And in 2 years, trains will be truly at capacity. [Editor’s note: What surprised me was the response of the manager of the railway to the question: What do we do then? was “I’m only worried about this afternoon.” I knew he was under pressure to get out what he had then and there, but is that the true attitude of the railways?]

Some companies that thought they would be saving money by manufacturing in China actually lost money when they had to air freight their goods to Target and Walmart – or lose their contract if they missed the deadline. Consider the differences in costs: a 40-foot container from Los Angeles to Houston by train costs $900. Moving it by truck increases is to $4,000, and air freight skyrockets 10 times to $40,000.

Many people are doing what they can to avoid this busy port, and redirect to others. Others will spend extra money on warehousing, and simply bring the goods in earlier in the year.

On a side note, however, long shoremen make about “$100,000 or more each year, with great benefits, vacation time and flexible hours.” The increase in imports is great business for the union dockworkers.

BRAINSTORM:
This big problem smells like a big opportunity for someone to me. Will that person be you? Let’s think this through.

1) The ports are overloaded, and it won’t get better. Is it possible to add another port somewhere? I know nothing of logistics, but I’d love for someone to contact us at (214) 231-2911, x. 4508 and tell me if that would ever be possible. I know that would take some big money, but maybe somebody out there has the money and the power to do it. I just ask that you remember me, and name it “Brain Storm Port” hehehehehehe.

2) This tells you that importing is IN, well, at least as a way of manufacturing. The problem is that the imported items are not getting IN – into the country or the end destinations – on time. So there’s something to be said for teaming up with Asian manufacturers and importers to compete in price. As I’ve said in previous issues, the majority of importers are individual, small business entrepreneurs. Is this something that you could do? How about coordinating import shipments? Coordinating import products?

3) What about getting into the shipping industry? Another major money industry, but someone’s got to do it? Maybe when you build the port, too, right?

4) Companies are having to add days into their supply chain, adding to their expenses for storage. However, this increases opportunities for companies that provide storage. Finding those companies before anyone else does, and convincing them to store with you for a longer period of time may be a challenge, but if you do it well enough to impress them the first time, you may have a client for life.

5) Transportation is at its maximum, with the trains being out of room within 2 years. The entire system is bogged down, even causing truck drivers to bail and go to cross-country driving. How can you open up transportation options? What hasn’t anyone else thought about? Or how about adding more railways to accommodate the trains? Is that possible and probable?

6) Across the board, if someone could better systematize the process, streamlining and coordinating the flow, that person would be invaluable. Are you in a position to do such an evaluation or to put together a think-tank of consultants that can solve the problem?

7) Longshoremen and dockworkers make over $100,000 per year. What product or services could you offer to this segment of the population? You could find out a lot about them and target your marketing specifically for them. Perhaps you could market through the Unions, and cut them in on a share of the profits if they offer your services or products to their constituents.