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Flexport CEO on how to fix the US supply chain crisis (twitter.com/typesfast)
290 points by atlasunshrugged 3 months ago | hide | past | favorite | 267 comments

Related: The mayor of Long Beach has increased the stacking limit.


It's weird to me that thousands of people work at the docks or with the trucks, and likely understand these problems quite well, but only after a silicon valley guy rented a boat to take a look and tweeted about it did it come to attention of the larger world.

Is it just that these other people don't want to "rock the boat" at their place of employment?

My guess is they assume, mostly correctly, that their viewpoint will be ignored. Even if their boss takes them seriously, somewhere between them and whoever can make useful decisions will decide that some dock workers opinion can't be worth more than all the reports and data they themselves are working with... or something like that. So making a stink about it is a lot of effort and emotional labor for almost no upside and non-negligible chance of punishment. Why bother?

I don't think that the "low-level" workers' viewpoints are accidentally ignored, it's far more likely that the decision-makers at the top actively don't want change.

The upside? Minimal (for them personally.. huge for the country). The downside? Anything "bad" happens, they're fired or worse (e.g. a stack of containers collapses, killing someone). Very asymmetric returns.

On the other hand, Twitter publicity both forces them to do something (bad press if they don't), and also excuses them in case anything goes wrong ("well I thought it was a bad idea but they pressured me to do it"). CYA in action.

Because if enough people do it, that might make a difference.

There is a lot of inertia everywhere. "This is how we do it" is an attitude that is everywhere and you do something for 30 years then run the show, you keep doing it how you were trained to do it when you started. There are also things like company and regulatory standards of how to do things that aren't necessarily based on anything that regularly gets re-analyzed.

An outsider taking nothing as granted can often find big inefficiencies.

They are most likely all blind men feeling an elephant. They can all see some inefficiency but they don’t necessarily have a great view of what upstream problem is causing it or who to call to fix it.

I would imagine most companies don’t sufficiently reward low level employees pointing out and proactively fixing inefficiencies.

Dock Workers don't have the ability To change city regulations. For all we know, the organizations have been pushing for this change for decades.

As far as we know, the mayor only changed this policy because a tweet told readers to contact the mayor. A dock worker has the ability to tweet or contact a journalist.

I would argue that is our duty to our fellow humans in society to know about the issues and our proposed solutions.

Or they have asking for it for many years and it was ignored until the president put a spotlight on LB harbor and the mayor scrambled to look like he was doing something. Time may tell if it has any impact. At worst, the mayor end up being able to say they tried something. At best it helps resolve the problem, or the problem resolves itself over time and they can still claim a credit

You’re spot on. The fact that Mayor Garcia didn’t take any action on something he SHOULD intimately understand until a Silicon Valley outsider told him what to do is ridiculous.

Yeah, it is part of a familiar trope that a Silicon Valley outsider with sharp wits can discover one simple fix that hundreds of trained logistics/operation engineers missed.

It seems a lot more simple than that - Ryan is a "celebrity" and has a 66K twitter followers. His tweets generated a lot of exposure so the politicians are happy to use it. I'm sure there was some meeting between trucking companies and the mayor sometime with great recommendations form the truckers, but everybody just said "we'll check it" and didn't do a thing. Now with media and twitter exposure it's hard to avoid giving answers.

But isn't this exactly what makes Silicon Valley so effective? A willingness to challenge the status quo and rapidly iterate.

Move fast and break things doesn't work so well with things like the supply chain. We don't have a good qa env.

> Move fast and break things doesn't work so well with things like the supply chain.

What about when it’s already almost completely broken and getting worse? That’s precisely when you need creative out of the container thinking.

When dealing with a system like the global supply chain, where the potential blast radius for issues is massive, it doesn’t matter how much incentive there is to fix the problem when the incentive to not make the problem worse by accident is so, so much bigger.

Move slow an break things isn’t exactly working out so well is it?

Breaking chains of stupid decisions is great.

But there is likely little or no understanding of what those decisions are or why they were made. Ask why the fence was put up before you start tearing it down. I agree the problem is huge, but the solution is unlikely to come from some outsider making a basic change. That change is likely to ripple into an even worse situation when we run it against the one testing environment we have.

It’s almost certainly because the tweet caused a bunch of people to call their elected representatives and exert political pressure. A couple dock workers aren’t going to be able to drum up that kind of publicity.

Because that SV guy has a whole PR aparatus at his disposal aimed at creating public pressure for action. In our attention economy this gives you superpowers.

Every now and then someone given superpowers would be the ideal solution in an emergency rescue situation.

From what I've seen Petersen has taken a vast reserve of capitalist wealth and leveraged it by investing into his people to progress toward his objective of a more streamlined freight experience.

He seems to be participating seriously in a continuous improvement of his own expertise on this focused objective like no one else with those kind of resources at any recent time.

His proposed temporary container yards have got to be very urgent.

The inherent real estate problem has always loomed large. The "Just-In-Time" supply chain approach has factored out all but the minimal inventory buffers as it proliferated over the decades.

Now JIT can not be executed and there is little alternative remaining.

The storage & warehousing acreage & square footage were agressively downscaled over the long term and the increasing dependence on a fully enabled pipeline moving at maximum flow has been an ever-growing consequence.

Expediting cargo is a task that can not be fully accomplished within a single lifetime, so you really need to start early and never quit if you want to make worthwhile progress.

I think Petersen's gotten better every year and has unique abilities to offer in this crisis.

He would probably make a good supply chain tsar about now.

And he's making himself available, people should jump on it and give him a try.

Each day of delay is another day longer before a stagnant economy can begin to recover.

Coming from a marine cargo entrepreneur after 40 years of much-needed continuous improvement indeed.

Almost all blue collar workers I know complain about how clueless their management is to operations on the ground. A complete "failure of common sense".

Bottom up communication isn't effectively or really in place because command comes from the top down. In many cases their boss and bosses boss never even worked a yard or understand the fundamental realities at the bottom.

Maybe not wanting to rock the boat, maybe just busy and not interested in waiting in line to speak to the manager.

Narratives about who is listened to

Theories about entrepreneurship for example are entirely based on the actions of financially successful entrepreneurs. There’s nothing to prove they are more rational or somehow superior…but that’s who gets to build the narrative.

It’s not clear to me whether the zoning regulation was changed in response to the Twitter thread.

Petersen is well thought of and his analysis and suggestions were copied by other industry types, for example Sal Mercogliano [1]. It also happened very soon after Petersen's suggestion.

[1] https://www.youtube.com/watch?v=ERqikbfoLnw

Happening so soon is actually a mark against it being related

I think there may be a slight causal disconnect between “guy tweets” and “stuff gets fixed.” I’d bet stuff got fixed after lots of stakeholders complained!

Ah Silicon Valley guys, saviours of the world.

I mean it was a government regulation, there isn't much they could do about it. I assume the 2 stack limit was due to safety reasons, like maybe they are more prone to collapsing like dominoes when stacked too high, and a good wind blows, I don't know. It makes me think of the egg crate challenge a little bit.

It's good that the mayor made a temporary adjustment and was allowed to save face. Hopefully it will make a difference.

Allegedly, the 2 stack limit was put in place for aesthetic reasons. On the ships they're stacked way taller than that!

Checks out, this is CA after all. NIMBYs are all about their sight lines. Couldn't possibly let a stack of containers diminish their view.

Not In My Expansive Front Yard View Of The Ocean Untouched By Globalization


No. It was entirely for esthetics.

I live near a port. Containers are regularly stacked five high.

Monopolies assume all forms.

I guess you've never been paid some low multiple of minimum wage.

You have no incentive to make anything efficient.

Longshoreman make an average of $147,000/yr + benefits in the Bay Area.


Didn't realize this. In a lot of other places the hourly figure is closer to $30-50 an hour.

Longshoremen make a lot of money!

And bless them they deserve it.

Do they? Why? Do you have evidence?

If Ryan's tweets had anything to do with this, my respect for him just went through the roof (and my disappointment with people actually tasked with figuring this out diminished proportionally).

Wait what? They are/were only stacking 2 containers high? When I google on how another big port is doing it, or example Rotterdam, I get a 5 year old video of 5 high stacks and a fully automated system: https://www.youtube.com/watch?v=60Fz5gZRX9c.

What's going on in Long Beach?

As I understand it, the two-high rule never applied to the Port of Long Beach, it applied to various other intermediate container depots throughout the city. These are not owned by the Port, but by various trucking companies, and it is these trucking yards where containers are now allowed to be stacked higher.

This is important because the Port is not receiving empty containers, but trucking companies that have empties on truck chassis need somewhere to put that empty before they can get a new container. Allowing additional buffer for empty container storage may allow the current traffic jam to resolve itself.

The rich have disproportionate control of government?

What is the reason for limiting it to 2 when clearly it can be 4 or 5?

The area around the port of long beach is rather dense residential, so in order to preserve views the city limited the height of container stacks.

> "These provisions, which have been in effect for many years, were established to address the visual impact to surrounding areas of sites with excessive storage."


Makes sense thanks

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.


Edit: added the larger context for the Bloomberg article quote

Owner-operators are actually not completely allowed in California. And trucks for the most part must be very new to comply with California emissions requirements. The "labor shortage" is in part aggravated by these regulations.

>Danielle Inman, a spokesperson for the National Retail Foundation, which has lobbied for California to overturn AB 5, told PolitiFact that the state’s regulations on trucking impact the availability of drivers and trucks

>(AB 5) makes it nearly impossible for truck drivers to be independent contractors

>At the time AB 5 passed, industry experts said that some owner-operators sought work elsewhere. Some fleets, too, chose to stop doing business with owner-operators in California.


>To meet the current clean air regulations, the state Department of Motor Vehicles blocks new registrations of any oversized vehicles older than 2011 — or those with engines manufactured before 2010.

>Some trucking companies have used the regulations to pressure drivers to buy newer rigs, and some in the industry have claimed that, while not necessarily the cause of the backlog, this kind of policy doesn't help.

Does “Very New” match with “10 years old”? 10 years is the average or target lifespan of a tractor-trailer and you can still drive them up to 2023.

AB 5 might have a bigger impact though

>Does “Very New” match with “10 years old”? 10 years is the average or target lifespan of a tractor-trailer

If 10 years is the average then you are eliminating 50% of trucks on the road. Do you think that could have an impact?

10 years is the average or target lifespan of a truck, not necessarily the average age. I’m not sure what the average age or distribution for trucks serving California ports are

Similarly, human life expectancy is 80 years in the US, but the average age is 38.

The same fact check says that 96% of vehicles are compliant, and order vehicles can be made compliant by replacing the engine.

Either way, a lack of trucks is not the issue, it’s the lack of drivers (because pay and conditions are poor) and the bottleneck at the yards where they can’t exchange empty containers for full containers

> made compliant by replacing the engine

This costs $20-40k [0] not including the down time and lost revenue from the overhaul. So that’s not a simple cost for owner operators.

[0] https://cagtruckcapital.com/truck-engine-overhaul-tips/

> Owner-operators are actually not completely allowed in California. And trucks for the most part must be very new to comply with California emissions requirements. The "labor shortage" is in part aggravated by these regulations. ...

Both of these claims have been disputed by fact checking organizations: https://www.politifact.com/factchecks/2021/oct/19/facebook-p...

This is one of those nonsense fact checks that they roll out when something is true but people who love government interventionism wish wasn't. Their conclusions don't make any sense.

They have two points: The contractor ban is currently under injunction in court so why would that affect anyone's behavior. Well, but people do change their behavior when something becomes a legal grey area. And being an owner-operator in CA is not clearly legal anymore, so why risk it? If you're a company that wants to do shipping in CA, does your plan include using owner-operators now? It takes a high level of asinine pollyanna-ism to not be able to think for one second why this might have a substantial effect on shippers.

The second point, that the "truck ban" is not at fault is also total nonsense. First they say "oh the law has been in effect since 2008" well according to their own link, [1] it is loaded with ramp-ups in the emmissions requirements. As time passes the requirements increase. As of now nearly all of the most stringent requirements are in place.

So besides citing the law which doesnt make much of a case for their argument, they then quote a partisan who loves the law to say there's no evidence that this law is affecting anything.

And then they take this pile of nonsense to claim it is mostly false, ending with this non-sequitur: "The COVID-19 pandemic has caused widespread layoffs and factory closures that haven’t yet bounced back to meet the surging consumer demand. "

The ports are full of fucking containers you fucking nitwits! Full of containers filled by workers working at factories! How could this have any bearing on the port issue?

Politifact is a total joke. They're clearly being paid to give cover to whatever their paymasters want.

[1] https://www.buswestpreowned.com/carb-truck-bus-rule#:~:text=....

I agree with everything you said except the unsubstantiated quid pro quo argument. In politics people seem very quick to, “ follow the money", but people have political bias he's outside of this and agendas.

My quotes are from the very article you linked, man.

Because we all know how those don't need to be fact checked.

> 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.

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."

> Erm, then pay some truckers to haul empty containers to some space in the middle of Arizona, Nevada, Texas, Idaho, Iowa, etc.?

The empty containers don't need to be trucked to Arizona, they need to be shipped back to China so that they can be filled with more goods and shipped back to LA. There are fewer goods flowing from the US to China though, so they are piling up in LA. Either the price of shipping from US to China has to fall so much that it becomes profitable to ship all these containers back completely empty, or the government has to subsidize the shipping cost - but then which government should even be responsible for paying for this?

Too bad they didn’t switch to collapsible containers: https://www.shiplilly.com/blog/collapsible-shipping-containe...

That would handle the trade imbalance by allowing more empties to fit on the way back.

Or the USA could actually make something worth shipping. But that’s probably a lot harder than replacing a worldwide fleet of existing non-collapsible containers.

Boeing aircaft and college educations, which are probably the two largest US exports to China, don't fit in shipping containers.

The US exports a lot of agricultural commodities to China. Those used to all be shipped in bulkers but now some are loaded into containers.


> The top export categories (2-digit HS) in 2019 were: electrical machinery ($14 billion); machinery ($13 billion); aircraft ($10 billion); optical and medical instruments ($9.7 billion); and vehicles ($9.1 billion).

Love the ingenuity, but isn’t needing to develop new technologies to overcome a severe trade imbalance just ignoring the larger problem of why there is such lopsided trade? It can’t be healthy or long-term sustainable for the US to basically stop manufacturing, can it?

> Either the price of shipping from US to China has to fall so much that it becomes profitable to ship all these containers back completely empty, or the government has to subsidize the shipping cost

What's happening is that everybody is playing chicken waiting for somebody else to blink and foot the bill for the fact that everything is out of whack. Why should the government break this logjam instead of the companies that sucked up all the profits over decades from this arrangement?

Since nobody is going to risk spending money, breaking the logjam, and then having their competitor who isn't spending the money benefit, they would rather all hit the wall simultaneously. Fine. But don't come whining to the electorate and elected representatives to fix problems that corporations, themselves created when it bites them in the shorts.

Spend some of those record profits, assholes, and the problems will get fixed.

Socialism for the rich; capitalism for the poor. Same old, same old.

Did you not read the entire thread above your post?

The issue seems to be a combination of factors exacerbated by the state of california.

Existing regs restricting storage space. Existing regs restricting available trucking stuck holding containers Existing regs disincentivizing labor or new owner operators.

All this is compounded it seems, by existing contracts limiting pay wait time.

So when wait time increases, due to 1)no space, (2)no trucks, and (3) no labor... mostly due to circumstances directly attributable to the state then nothing moves.

Where are the corporations making money off this ? Can you name them?

The legal environment is not new to the companies operating in it. Nothing in that environment prevented them from preparing properly, yet they didn't.

Example for why your argument doesn't hold water: one of the issues mentioned in the thread is that trucking companies can only stack containers two high in their yards. Well, what do you think would have happened if that regulation had been changed to six high (one of the suggestions) 20 years ago? Trucking companies would now own or lease smaller yards!

GP is absolutely right that the capitalists need to foot the bill of clearing this mess.

It does seem to me that government should step in to resolve the Gordic knot of coordination problems discussed elsewhere in the thread, but the companies who screwed it up in the first place need to be stuck with the bill. That's part of the deal of capitalism: you get the chance of profits, but also the risk of losses.

>Erm, then pay some truckers to haul empty containers to some space in the middle of Arizona, Nevada, Texas, Idaho, Iowa, etc.?

Would that just cause a container shortage at the other end of the supply chain?

There needs to be more buffer real estate for containers. One of the thread creator’s reccs was to do this using cargo trains.

But you are right as well. We need to send more containers back to East Asian ports where they are most commonly filled. The problem is that ship owners make more profit by sending back container ships immediately without waiting for them to be restocked with empty containers.

There needs to be a legal or contractual requirement for shippers to lose some economic opportunity cost to help rebalance the supply and demand of containers.

This was already one Rx from the Twitter thread.

Also not all “capitalists” have aligned incentives. Everybody wants shipping to be efficient except those who profit from this inefficiency.

Specifically ship companies are making huge profits by racing to the big East Asian ports right now. So much profit that they don’t want their ships to wait in US ports for empty containers to reload. This asymmetry makes it even more profitable to rush back to those East Asian ports. Snowball of profits for them at the expense of everyone else.

This is a Tragedy of the Commons situation. It is a great purpose for government intervention.

Not at all Tragedy of the Commons.

In 40 days (one round trip from US to China), the system clogs and the boats can't go running off because they can't unload at all (happening now). At this point the system stabilizes. Sure, it's not a stable point that the shipping companies want, but it is stable.

Capitalism has a way to deal with this. It's called "rising prices". However, business managers have gotten far too used to never suffering any consequences for their decisions. The moment actual responsibility comes down the pipe they all start whining and running home to Daddy (the government) for help.

Let the ships sit. When the shipping companies lose more money with a sitting ship that can't be unloaded than they gained racing back without empty containers, it will correct.

That’s idealistic.

Do you think people will just tolerate hyperinflation that would cause and sit quietly in line while waiting for overpriced food staples? Riots. Public disorder. Maybe even rebellion against the government.

Governments get involved because the individuals in that government fear what happens when we reach the tipping point where basic society breaks down.

I think we forget that 95% of all goods (or their inputs) are shipped and over 20% of GDP directly relies on shipping. That’s a massive gamble that the same people involved in the supply chain that is suffering from massive entropy can magically reduce that entropy after it snowballs.

Won't there be an equilibrium at some point? Empty ships rush back to Asia but can't load in Asia because all the containers are back in the US. Hence they will sit idle in Asia not earning any money and ships that do carry empty containers back will be rewarded because someone will pay to ensure trade is not blocked in Asia

in a closed system, at some point the containers stuck in the US would become valuable enough in china that the ships would prioritize shipping them back, yes. but it's not a closed system, the chinese are building new shipping containers as fast as they can, and every new container they build lessens the demand for those containers stuck in the US.

I’m not sure if waging a siege on ourselves is a free market solution here.

Why does the empty container have to be taken back to long Beach? Couldn't it be taken literally anywhere else?

Because the container isn't owned by the trucking company. If you have a contract to take the container to a particular place only, you risk breach doing otherwise; plus think about it, if you want the trucking company to rent or purchase more space to store the containers, that's a major cost increase you're putting on them and they'd have to modify a ton of contracts to get paid there

Because the empty needs to be either filled and put back on a ship going back to Asia, or put back empty. Either way, all the containers that go from Asia to the US need to go back. And it makes sense for the port that unloads to also load.

Doesn't seem like it makes sense in this case, though, does it?

Geographically there is no viable other port. And if there was one, you’d need trucks to get the containers there anyways.

If they don't go back, how will China ship stuff to us?

Apparently the containers are not fungible; maybe they should be.

its surprising. I thought that was a key point of them. Granted the standardized sizes and construction standards is probably the most important thing. But once you have that the next logical benefit is to treat them as fungible commodities, like digits in an account.

Perhaps in normal times they are, but when the flow equilibrium is disrupted suddenly the discretized reality pokes its head through.

The containers are sufficiently fungible for the purposes of mounting on trailers, stacking in lots, and stocking the ships.

The containers are not sufficiently fungible in the fact that they are owned by different entities which may not all want the containers to be shipped to just any place.

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.

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.

Would it make sense to clear the jam by scrapping some of empty containers for steel recycling?

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.

Containers (8'x40' single-trip) were selling at auction over the last few years for $4000-5500. At auction in the last month I have seen the same item sell for $10000-14000.

Accepting scrap prices for a good container is a losing deal right now when the market obviously has room for them at a much higher price.

Empty containers are worth a lot in East Asia right now, just not in US ports or distributor points. It’s a misallocation, not a global oversupply problem

If they’re so valuable to people in East Asia right now, then people in East Asia have an incentive to take a more active role in getting them back.

How much is a train ride up to the Port of Oakland? Less than $5k per rail car? Probably a lot less. So some enterprising person in Asia could organize that and get them on a ship heading back faster than their competitors, reducing their cost and gaining a competitive advantage at the same time. So why isn’t that happening?

“more active role” More than what? Do you have any evidence the relevant actors are not trying to source containers any way they can?

Right now empty containers are 5x-10x their pre-COVID cost in Chinese ports. That’s how prices work in a market system. Perhaps there are non-market forces at work or perhaps the scale of the problem just requires more incentive before it becomes worth while to charter an expensive ship to bring containers back to China.

How would you load them on rail car? If there was a working railroad system connected to the docks maybe. A working railroad system would solve a lot of issues in the US. But it is impossible to get a discussion on infrastructure as it gets abused by both sides only for political reasons.

Wait, are there not rail heads at shipping ports? As a complete layperson, I would have assumed that’s like the one thing a shipping port needs, right?

Indeed, rail lines seem like they would help. But then I think of the Teamsters and Longshoreman unions, and I expect the status quo favors trucks.

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.

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

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.

Seems like your comment was just an attempt to dunk on a group of people you seem to believe are over paid. You have no real facts or information about how much port workers make and you present no evidence that rules that you may deem to be “inefficient” aren’t in place for safety reasons. You also seem to ignore the fact that most manual labor jobs have to provide enough income for a worker while they are able to physically engage in the work to provide for the significantly longer period of time their bodies won’t be able to do the work.

Everyone in this country seems to think they know exactly how much everyone else should make and surprisingly they always think others are over paid.

It’s especially comical when it’s coming from tech folks where an L7 sitting at FB can be pulling down seven figures and could sit in their aeron chairs working till they are 80, we should all recognize the privilege we have in that regard

> Seems like your comment was just an attempt to dunk on a group of people you seem to believe are over paid.

I was responding to a comment that argued they weren’t paid enough, and I was just making the counterpoint.

So no, if anyone has an axe to grind, it would be you.

I don't think FB will last that long. I believe they reached high tide, same as Google and probably Amazon...

Every system has a downside. Container freight is awesome, but it creates systems that have to constantly move. When the systems stop you get whiptail effects that can cascade.

Ports are natural chokepoints. Just like Apple or Google or Facebook extracts a toll, so too do the ports, longshoremen, port truckers, etc. Their rent seeking is baked into the system.

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.

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.

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

This is my understanding. The ports are "backed up" in the biological sense.

Does "chassis" ~= "truck"? It seems like maybe a technical, specific term that I don't understand.

A chassis is the trailer to carry the container. The truck pulls the trailer/chassis.

Often chassis dont have cranes to (un)load containers themselves and therefore require cranes (capex heavy assets). Such cranes aren't everywhere/in surplus.

The truck driver is a part of the solution, but not to any of the primary issues right now.

Just saying “give truck drivers more compensation and better working conditions” doesn’t fix the fact that their destinations aren’t open 24/7 so keeping the ports open for an extra shift doesn’t do much right now.

It doesn’t fix the fact that the truck driver depends on someone else to take their container and/or chassis at the end of a delivery and many delivery depots can’t or won’t right now.

And the biggest asymmetry right now has nothing directly to do with truck drivers. There is a shortage of empty containers in East Asia and a glut in the US. Container ships aren’t waiting in the US ports to load up with empty containers, so thyme are exacerbating the issue.

> Why don't you have enough trucks?

Trucks are plentiful. Trailer empty chassis are not. Your assumption that truck labor is in short supply is a derivative of your misunderstanding of the difference between the trucks and the chassis.

The truck is the thing with the Diesel engine, the cab, and the truck driver. It can detach the trailer and pick up a new trailer.

The thread clearly identifies the “empty chassis” (the trailer with wheels that is capable of mounting a standard container on top) as one of the scarce items.

>we either don't have enough physical trucks (I doubt this)

There was a reddit thread in the truckers group around a year back which literally said this: there are not enough physical trucks since trucks have to been maintained and the spare parts for it are not making their way across border fast enough. This meant that owners have to buy new trucks to compensate for their broken down trucks and leading to escalation of costs which means they expect the same person to work 2x to make up for it.

It's in the Twitter thread, to do a port pickup you have to wait days at the port because they're so slow, (because of the traffic jam of containers), truckers are choosing to do pickups elsewhere that doesn't involve waiting for two days to get their load on.

They're paid by the load, so sitting idle is a non option.

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.

Lots of (most?) places have permanent imbalances in # of full containers imported vs exported, it just means empty containers are shipped out or in.

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.

>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.

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.

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.

People will act to maximize their short term benefits vs costs. They’ll buy American made, Union made, imported, whatever is cheapest. Of course at the margins some people will choose (place value on) one source or another, but one cannot expect the larger part of the population to act against their immediate incentives to achieve a desirable social outcome.

> 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.

>at least now even American companies realised this and moved production to far superior Chinese manufacturers.

This sounds like it needs a /s.

For one thing, the transfer of American manufacturing to China happened a long time ago for many common items. The quality of the items that we received here in the US from these Chinese producers has never reached the previous level for some products.

I have bought and used products from all over the world too. Steel and iron tools from China and India frequently are not tempered correctly so they fail, sometimes on the first use. I learned a long time ago that the best tools for serious, everyday usage and longevity - those things you buy once and use forever - are old American-made tools. Once the brands sold out and moved production to China, quality dropped significantly and has not recovered.

What you may be seeing is the case where China ships its highest quality tools, parts, etc to your country, whatever that is, because after doing market research to understand how to accomplish market penetration, they found that people in your country would not compromise on quality/price/whatever and so they know that their cheap-ass junk and production seconds need to go to a less-sensitive market like the US, where items with the same functionality can be found at widely variable prices and no matter the price - there will be a buyer. That condition may not exist in your country.

The operative phrase in any company's financials is "for the (your country name here) market" which indicates that someone at that company had the responsibility of researching buyer habits and expectations in that country so that any product launches would be more likely to succeed.

> 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.

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.

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?

I share same sentiment on consumer goods, especially cars.

Your experience with industrial equipment is irrelevant here since it's still being done in US.

This sounds totally foreign to me. In the industrial world, American equipment is pretty good quality. Japanese also. And German, Italian, and French.

Chinese is cheap but their machinery is generally not very good. They screw up all sorts of stuff: wrong bearings, designs are copied but not always thoroughly thought out, weld issues, poorly programmed PLCs, incorrect wiring, poor metals quality control, dangerous safety implementations, the list goes on and on. Some bigger manufacturers are getting better there.

But places like Turkey and Korea have a nice balance of technically "good enough" and cheaper than the Euro/American products, though Korean machines have gotten more expensive and are technically very sophisticated.

The idea that anyone building a factory would turn to China for technically sophisticated machinery is interesting and would be a quick way to get fired in industry. China has gotten a lot better over the years, but I think a lot of people forget that a lot of what happens in China is assembly, not necessarily manufacturing of the subcomponents, which is where much of the actual value add is. If you do get machinery made in China, you look for those who use as much European, Japanese, Korean, or American parts as possible.

> of course software is different, due to its globalised nature

Sure, not American, all the American software companies. They are global, unlike every other giant enterprise.

> 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.

Be careful of European Exceptionalism that reverberates same uninformed thinking American Exceptionalism was known for. Usually, full of prejudice, glib pride and delirious nationalism.

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.

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?

This. There are different levels of Chinese manufacturing. One made for top Europe and American brands that are good quality while others is the utter junk that floods the Asia Pacific.

Indeed. I live in Asia and one of the first things I learned when I moved is that Some American Brand's clothing in Asia is frequently not of the same quality as Some American Brand's clothing in the US, even when it's actually more expensive.

Yujiintl's LEDs. They are not cheap (~1$/W for 97 CRI (typ) strip-suitable SMD LEDs on tape), but their color accuracy, especially with the 50-100% more-expensive triple-phosphor VTC series, is hard to match, especially for what are still "affordable" prices.

Huawei and Xiaomi comes to mind. Build is not Apple quality, but technically superior (I say that as I own pretty much every Apple product)

It's so superior that even their CFO prefers to use Apple instead.

I expect this is highly product and Industry specific. In healthcare, medical devices and drugs, the US, and Japan are the gold standard. Most companies won't even Source raw plastic materials or chemical precursors from China and India due to Quality Control issues.

I would pay 10x more for something made in America, because right now the defacto price is infinity.

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.


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.

>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...

That's what I am looking forward to!

What is so special about manufacturing? What would be wrong with assembly-line workers going the way of farm workers?

14 million farm workers in 1910. 3 million today. Tragedy?


> What is so special about manufacturing?

That's a good question. The answer is that it drives productivity growth. Most of the economy does not increase in productivity at all. Your haircutter or waiter is not more productive than a haircutter or waiter in the 1800s. But they make much more per hour because of cost-disease as they attach themselves to industries where one hour of labor can produce exponentially more output. So you have 20% of the economy driving basically all of the economic growth and productivity gains, and the wage growth of everyone else is dependent on this 20% doing really well. Therefore some nations, like China, are willing to fight for those manufacturing industries, even as other nations, like the US, think they can maintain advanced status if their workforce consists of marketing executives and baristas. They think IP protections will keep those marketing executives earning huge bonuses and then that will support spending more on each espresso. Long term, this is not a viable plan, even if it works well in the short term.

> 14 million farm workers in 1910. 3 million today. Tragedy?

No, that's productivity gains. But we are still farming and producing that food. The equivalent would be if the US got out of the farming business and turned to designing genetically engineered seeds. Let all those other nations grow food, we will do the high value stuff and outsource the actual growing-of-things. Well, OK, until other nations decide to stop paying licensing fees or switch to their own designs. Then not being able to grow things would really hurt us. Same for not being able to make things and turning to just designing stuff.

When a nation loses their increasing returns to scale industries is when economic growth stops.

Farm workers went from 14m to 3m because farms became much more productive (even more than 14/3, since we produce more agricultural goods too).

Surely you see that having fewer workers because the work is being done someplace far away is not equivalent having fewer workers because we can do more work with fewer.

And what would you suggest those workers learn to do that could substitute for manufacturing job wages?

I think there has been more a winding-down of manufacturing jobs, not an abrupt cutoff.

The winding down consists of a large number of independent abrupt cutoffs.

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.

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