Flexport CEO on how to fix the US supply chain crisis - https://news.ycombinator.com/item?id=28957379 - Oct 2021 (225 comments)
The zoning change is for TEU storage outside the port. The port itself was not subject to that rule.
The Port of Los Angeles is a landlord and is not directly involved in operations.
Private companies, such as APM, EverPort, and others, rent piers/berths and are responsible for the actual operations and logistics.
Some speculation: recently I’ve heard of some ships not even waiting to load empty TEU’s as they normally would and instead they are immediately leaving for China, literally empty. I suspect this behavior is what turned the congestion we had before into the quasi deadlock we have now.
Going back empty works once. Or more times if you're headed to a different market, I suppose.
Hopefully we’re doing better than that!
If this is happening, what would be the consequences of allowing even more TEUs to be stored on the US side?
But why stop there? Ryan suggested 5 courses of actions, and made it clear that we need to act on all of them at the same time. So far only the first of those 5 steps have been acted on. The rest of the steps are likely either bad or the people needed to act on them are doing that NIH bullshit (which I can understand to some extent given how much negativity is being directed at Robert Garcia). But negativity or not, if those are good suggestions, we need to act on them. Would love to hear any thoughts on how to mobilize support for quickly validating/invalidating those suggestions, and then acting accordingly.
If it's possible to cancel brands and individuals, it should be possible to do the same with politicians as well. I hope it doesn't turn out that we care more about certain individuals' views than the prevention of a nationwide and potentially even global crisis .
 From Ryan's tweet:
> I can't stress enough how bad it is for the world economy if the ports don't work. Every company selling physical goods bought or sold internationally will fail. The circulatory system our globalized economy depends has collapsed. And thanks to the negative feedback loops involved, it's getting worse not better every day that goes by..
1) Executive order effective immediately over riding the zoning rules in Long Beach and Los Angeles to allow truck yards to store empty containers up to six high instead of the current limit of 2. Make it temporary for ~120 days.
This will free up tens of thousands of chassis that right now are just storing containers on wheels. Those chassis can immediately be taken to the ports to haul away the containers
2) Bring every container chassis owned by the national guard and the military anywhere in the US to the ports and loan them to the terminals for 180 days.
3) Create a new temporary container yard at a large (need 500+ acres) piece of government land adjacent to an inland rail head within 100 miles of the port complex.
4) Force the railroads to haul all containers to this new site, turn around and come back. No more 1500 mile train journeys to Dallas. We're doing 100 mile shuttles, turning around and doing it again. Truckers will go to this site to get containers instead of the port.
5) Bring in barges and small container ships and start hauling containers out of long beach to other smaller ports that aren't backed up.
This is not a comprehensive list. Please add to it. We don't need to do the best ideas. We need to do ALL the ideas.
We must OVERWHELM THE BOTTLENECK and get these ports working again. I can't stress enough how bad it is for the world economy if the ports don't work. Every company selling physical goods bought or sold internationally will fail.
I wonder if some governmental bureau tasked with coordinating this market hasn’t been shuttered in the last couple years to some lobbyist great success…
The other measures proposed (forcing railroads, national guards etc) are of course of a different order, but it's not clear they'd be necessary if the build-up of empty chassis at the port (because offloading in the nearby area wasn't allowed) never materialised into a massive bottleneck, because zoning laws were deregulated.
Presumably the port would've architected its systems to work within all sorts of constraints, come they from physics, or business, or regulation. The fact that one of them can easily be relaxed is immaterial to their failure to account for it in the first place.
Will the port's insurer cover damages when a 3 or 4 high stack falls?
But yeah, you do have a point.
One could also argue that it’s still a brittle, overly lean organization if a landscape regulation tipped it into service disruption.
Loan them sounds like they want them for free.
What's the plan for the military to move containers during the 180 days if all their kit is loaned out?
Are we going to blame driving time restrictions next?
Can't believe I am giving government delays a pass here... but I try not to look a gift horse in the mouth when we get near-immediate action from people who aren't known for solving problems with any sort of urgency.
EDIT: And I'm even a customer of Flexport!
It seems odd that no one has tried this, yet as someone who has worked in a factory, I can easily believe that the absentee managers have no idea what the hell actually goes on among the workers.
You need to spend significant actual time, to the point of working actual shifts, to get a clear picture of things sometimes. People have weird and wrong notions of what efficiencies matter sometimes, for example. Shaving a second off an action repeated thousands of times daily matters, shaving a minute off of a rare task that's not even done every day matters far less in comparison.
In a democracy, we are the government. People who know how to fix problems need to engage with their representatives, not just hope they’ll figure out freight logistics problems because they have a law degree.
But since the general public thinks of positive as good and negative as bad, he's using the word "negative" to describe a bad situation. This kind of thing bugs me because I know control theory, but it's really in the same category as "Is Program X an X11 client or an X11 server?"
Uncontrollable positive feedback explodes. Uncontrollable negative feedback freezes.
Not for the world economy, but for Chinese economy, as it's what US companies make the most of their money.
What the current crisis shows the most is that just how close the US economy coming to a sever crisis, from well.... just missing the shipment of holiday toys from China.
If China can inadvertently move US markets through just messing up with shipping toys, imagine how bad a deliberate economic sabotage action would be.
So this is not just a matter of Chinese factories not being able to sell their goods (in which case their government will take care of them as they have done in the past). This is about US e-commerce businesses who can only fall back on their banks (and which are far more unpredictable in their generosity).
Ryan's idea to mobilize the military resources would have been a no-brainer and would have already happened in at least two countries I have lived in before.
One final detail - this may seem like a recent issue, and most of us only heard about the problem sometime in early October. In reality, the industry press has been covering this since at least March , when the backlog of cargo ships at LAX started exceeding 20 (it's supposed to be well below that). Now it's at over 70. So it's been 7 months with practically no action until a week ago. I am a Democrat, but this is not going to bode well for Biden.
So the idea that this is all about the drop shippers is laughably wrong. But throwawayboise does bring up a point that's worth discussing - what kind of crises are "beneath" the role and purpose of the US military? Is their role just to blow shit up, or is there an economic and humanitarian angle there as well? For example, if an earthquake took out an entire metropolitan area, would it be beneath all those soldiers to dig for human remains, or would they leave that to whatever the more appropriate branch of public service that would be (even with the understanding that joining forces would save more lives)? I know that in the other two countries I've lived in this would be a silly question - of course the military would roll up their sleeves. In the US, I genuinely don't know. The author of the above comment is obviously ignorant when it comes to economic matters, but when it comes to military matters, I wouldn't be surprised if his tone resonated with many others.
FWIW, Ryan proves that not everyone in the US thinks like that, and certainly all the people from the international community I've met wouldn't agree with throwawayboise either.
Generals make a living from becoming lobbyists for the complex, and without a commander in chief keeping them in check, it's business as usual. And obviously they can walk over Biden all day to do this.
I think you have just affirmed what I have said.
USA is world's biggest, but an extremely fragile economy which is full of businesspeople too used to bailouts from a caring government. It's a bigger miracle it never seen major crisises from "encounter with reality" before.
> We truly are talking about a Lehman Brothers scale of a problem, and as Ryan pointed out, the only way to fix this is to unblock the ports. So if you're eventually going to have to do it, why not do it before millions of companies go out of business as opposed to only after that's happened?
I think it's essential in a capitalist market economy to let the market forces to do their job, and for Lehmans to pop from time to time. USA faces such a big crisis during every new "Lehman Brothers moment" exactly because it never lets its Lehmans fail.
Now, imagine China will embargo USA next time... Trade with USA is just a few percent of China's GDP today.
I did intern in BestBuy 10 years ago, and I know what insane portion of profit comes from around Xmass. I honestly want the US to really fail here, and fail hard, and have a Lehman moment again. It's vitally important for the US to finally have such crisis to turn the ship around, pun intended.
Or the next time, spoiled US kids will find out that there are way worse things in life than missing their new iphone 15 for christmas.
The only way we can get better at long games is to examine what's driving our current weakness in that area. My guess is that it has to do with the dynamics of presidential terms. To get re-elected, you have to achieve something big in the first four years, and anything big will piss off the other half of the country and will make you lose the congressional elections at the end of your second year. So the solution is to either do something big that buys you favors with both political parties (literally nothing comes to mind), or to get it done in the first two years. China, in comparison, has been plotting the takeover of Taiwan for decades, and is very strategically, step by step, moving in that direction. If this was the US, the only option would have been a quick invasion or a start-stop effort every 4-8 years.
If the US fails really hard here, many innocent people will lose their jobs, homes and lives.
Allowing stacking over 2 high is only useful if you have the equipment to stack over 2 high. A place that just stacks empty containers 2 high probably only has large forklifts. The special equipment for high stacking is far more expensive, and only bought if you need it.
A more useful proposal is a "peel pile". This is a system which assigns outgoing trucks an easily accessible container to deliver, rather than a specific container that has to be retrieved. There's an app for that. This is being implemented by IMC, the largest marine drayage company in the US. They say they're already up to 8 high stacks in the LA area. The higher the stack, the longer the retrieval time.
"This keeps drivers moving and productive, even if they don’t know the exact load they’re getting or the delivery location." So it's really dumping the sorting problem on drivers. They have no idea where they're going next. There has to be some way to separate containers by approximate location to make this work, so a driver knows how far they're going to be asked to take the thing.
How well this all works depends on how well the software organizing the stacking works.
These are empty containers that are getting unloaded and stacked in order to free up the truck and its chassis for another load. The equipment for doing that stacking/unstacking is called an Empty Container Stacker . These are different from a Reach Stacker  which will have much less vertical reach and are also different from Container Cranes .
and does 7,500 container moves a day usually, but not in this environment, they are doing like 60% usual capacity.
How many cranes does the Port of Long Beach have?
The berths at the Port of Long Beach's Pier G International Transportation Service terminal are equipped with 17 gantry cranes. Of those cranes, six have outreach of 19 containers across, seven have outreach of 16 containers across, and four have outreach of 13 containers across.
My understanding of what the Flexport CEO said in their twitter thread was that the best example of the problem is the haulage company that's keeping its driver count * 3 empty containers around on-chassis (which I think means on wheels), just sitting in their parking lot, because they have nowhere to put their empties, because they empty-storage is maxed out at the 2-height capacity. All/most of the haulage company's chassis are now tied up with empty containers, which prevents them from being able to go pick up filled containers to ship, which stops the full containers from getting picked, etc.
It's stacking restrictions for empty containers in lots that are not at the port, I believe.
> on-chassis (which I think means on wheels)
In container shipping, a chassis is basically a trailer that accepts a container and can be pulled by a semi-truck or one of the utility vehicles they've got at the port to move things around.
If a chassis comes back with an empty container on it, and the port isn't accepting empties, you've got to leave it somewhere before you can grab one of the many containers sitting at the dock that have goods waiting to be delivered. If the dock yard is full of containers, they can't unload the boats. If the can't unload the boats, they can't load outgoing cargo including outgoing empties.
Stacking empties higher, especially away from the dock may free up chassis that frees up dock space, etc, that gets things moving and then the empties can come back. But, that only works if the storage yards have the equipment to stack higher; which probably they don't all have. The thread mentions a limit on stacking empty containers, but the zoning limitation is for stacking any containers, it's just that outside of the yards at the port, you tend not to store full containers. Once you get those on a chassis, you want to get them delivered either to the final destination or a storage yard at another port or a train depot, etc. Empties are a bit different; you'd prefer to load filled containers most of the time, so it makes sense to stack some empties from time to time; also a trucking company may want to have some empties to take to an exporter, etc.
Honestly, I had thought that both chassis and empties were fungible, kind of like with rail wagons. You count what goes where and if things are uneven over time, make some transfers to bring it back, but otherwise no big deal. But the thread says otherwise.
How does that work for containers?
Apparently, it doesn't. I would have thought at least some shipping lines would have gotten together to allow for offsets and settlements and all that to ease logistics. Maybe the lines don't want to coordinate or enjoy the semi-lockin that returning a container to the line's yard means it's most convenient to pick up an outgoing container from that yard, or don't trust their inventory with each other.
When Tesla needs space urgently, they put up a tent. When the military needs to start a war they manage somehow to unload their tanks.
Come on, USA, we still know how to do stuff...
And I cannot imagine a local zoning board wanting to go out on a limb to do something novel like approving containers just because a port is backed up.
Heck, budget the possible fines into your business plan for holding the containers. Delivery firms already budget for tickets from parking illegally to make deliveries. This isn't so far removed from that.
If you can honestly say, "we fixed the problem and didn't hurt anything with our temporary fix" then the permission people who come along afterwards to fine you are going to have to think seriously about suspending the fine that your solution drew. Don't do anything criminal, but accrue a bit of civil liability: it will either be a cost of business, or will be forgiven.
As for contracts: If I am obligated to return the containers, but I dump them for a few weeks on a disused airstrip, I'm still going to, eventually, fulfill my contract, when the port allows me to.
No excuses. Fix problems, don't brainstorm reasons not to fix then.
I can, if they get paid for it. Rent should be reasonable for short-term storage and unreasonable for long-term.
There is also a huge amount of land at Palmdale airport, 1h30 north of Long Beach.
A glut of empty containers is a stupid problem, but the solution can be stupid easy, if we choose to make it so.
> It would also be interesting to know if it would be feasible to make the containers able to be disassembled and multi-packed into an empty container.
Not really; everything's welded together, and if you unweld and reweld, it's not going to be as strong. Plus that's a lot of labor. There are some collapsible containers, but those tend not to have sides or a top, which is not ideal for ocean shipping.
There are so many of them, that they couldn't find a picture of one of them to illustrate the article
I think they have a contract with a stock image provider, no photographer, and no one to seek out and license original pictures. Writer are probably asked to select an illustration in their stock image library.
I think it is a disgrace to journalism. The front picture is, with the title, the most important part of the article, do some effort FFS, or don't put a picture at all.
Is it just me or is that a shockingly low amount for those websites?
After Great Hill bought them for $20m -- presumably with a ton of debt, or something -- they then put an idiot named Jim Spanfeller in charge. Jim managed to get the entire staff of deadspin -- also a profitable, well run site -- to quit en masse. Said staff later started Defector and are running it as a coop, basically. Defector has survived a full year running on subscription fees and largely without advertising (or maybe entirely without?).
This begs the question: If container storage were the only bottleneck, wouldn't operators merely lease space further afield? There's plenty of space in Corona, San Bernardino, and environs that wouldn't take more than a 30 minute commute each way.
I can't help but feel like there are other confounding factors at play.
That's a side issue, though. As the number of containers in temporary storage increases, system throughput drops. So, once you get into overload, you're stuck there until you somehow reduce traffic or get more capacity. That seems to be the current situation.
It's not just at the US end. Shipify reports about 200 ships stuck waiting to get into Chinese ports. (That article has a good overview of the situation.) At the China end, there's an empty shipping container shortage.
Back in July, US farmers were also complaining about an empty shipping container shortage. Ship lines wanted to load up and get out, because the China->US rate is currently much, much higher than the US->China rate. So loading up containers at the US end apparently cost time and profits. The way empties are handled is driven by a system of economic incentives to not hold onto empties, and apparently that's not working well enough to get containers back to someplace useful. Someone has to pay to ship the containers back.
This is such an obvious thing. Do they really have people so incompetent they didn't think of that? Wow
Odds are you could offer truckers a special premium flat rate to clear the blockage - but it wouldn’t be sustainable.
Do shoes need to cost $20 or do the workers need to be paid $20/hr to afford $60 locally produced shoes?
I mean the rhetoric of free unregulated market is that the “homo economicus” would use total information and make fully conscious decisions.
Seems like some are withholding information to push other actors to make bad deals, externalize losses and generally speaking skirt from supply/demand dynamics.
If you don't want a delivery you don't bid on it or you set your bid high enough to make you want to take it. If no one bids on a delivery then the shipper raises the maximum they will pay and the process starts all over. Delivery location or pickup location a horrible place? Again, don't bid or bid high.
This is exactly the definition of a free market. Telling an independent that they must take the next load available without letting them decide if they even want it is not. That's being an employee. And shipping companies have spent years getting rid of their own fleets and drivers to push the cost to the individual drivers. And yes, there are a LOT of apps for this.
To give you a taste, this is him 3 years ago: https://www.youtube.com/watch?v=hjUs7o-TnjY. I remember watching that video the first time and being particularly struck by his insight on how entrepreneurial sales is different from regular sales , which I have been able to apply since then on a regular basis.
It's interesting to note that we had a president like this, and that was Herbert Hoover. Hoover's claim to fame before being elected president was saving Belgium from starvation during WWI, the dude deeply understood logistics and had lots of connections so was able to negotiate with all the parties to get humanitarian relief and set up his own NGO. I picked this up from reading this biography of him. Unfortunately he's become only associated with fumbling the Great Depression.
I've been meaning to read that Hoover biography forever.
I thought the humorous podcast American Presidents: Totalus Rankium had an excellent two-parter on him:
Part 1: https://www.podbean.com/ew/pb-64j34-f045e3
Part 2: https://www.podbean.com/ew/pb-zsqhc-f1a4af
That’s a legend that is in fact not true. He actually laid the ground for most of Roosevelt‘s „New Deal“ policies. These policies were likely ill-conceived and turned a bad recession into decade long depression.
A CEO who built or run an actual value-adding business (e.g Flexport) probably has more integrity, intelligence and aptitude than the average lawyer-who-seeks-politics who very often turn out to be snakes.
There is no way for a food stamp program to generate a profit - that's entirely opposite from the point of it! Closer to home, you can tell when corners are getting cut for budget reasons that are penny-wise and pound foolish in a department at a businesses that treats departments that don't generate profit as a cost center, eg the IT department.
Businesses also have the luxury of firing poor workers. Government has no such luxury with their poor.
Here's the thing - I've run startups that had a strong business, and those that haven't. While I would believe that my fundamental values never changed, I can tell you that I was far more tested in situations when we were running out of money than when we had 8 figures in our bank account. For example, how do you design a paid leave policy? With 8 figures in the bank, you really have to be a psychopath not to leaning on the generous side. But when you don't know if you can do the next payroll and the financial security of 100 people hinges on you hitting the next month's target... and then someone tells you about a family member who just passed away... Sometimes there are no good solutions, and you want to avoid getting yourself in those situations. So ironically, a hard-hitting CEO can sometimes lead to a better paid leave policy than a startup run by the most empathetic social worker in the world.
Yes. It would be great to have non-ideological leadership focused on solving practical problems instead of waging culture war.
Perhaps no one wants to ship them back because it's not economical?
This whole situation would make a great "systems design"-level tech interview question!
* consumers were shifting spending from experiences that would've been COVID impacted (holiday travel, entertainment venues, restaurants) to online shopping
* industrial supply chains in Asia were the least impacted by COVID due to the relative lack of explosion in cases there compared to the rest of the world, so we are legitimately shipping more from there and exporting less
* a good chunk of the medical equipment that has been necessitated by COVID (e.g. masks) is made in Asia and that has made demand even more lopsided
* there was a ship backlog because COVID impacted how ships were getting unloaded, and at one point they weren't sending back ships with empty containers to reduce turnaround times, and now there are not enough containers in China and too many in the US.
Wendover Productions video: https://www.youtube.com/watch?v=b1JlYZQG3lI
Yes. To quote JP Morgan's recent article "Dude, where's my stuff?":
> The surge in US import demand has led to a sharp rise in eastbound freight rates (see charts for Shanghai->LA and Shanghai->Rotterdam). However, westbound freight rates have not risen nearly as much, leading to an odd and problematic phenomenon: incentives for container owners to move them back to China empty to accelerate receipt of eastbound freight rates, instead of waiting for containers to be refilled to earn westbound freight rates as well. This further exacerbates supply chain issues, since US goods (i.e., grains) that were supposed to depart US railcars and warehouses for export remain in place, occupying space that US imported goods were destined for.
Sounds absurd, but that's how it is.
In my case it's actually cheaper and much more flexible to build it as you would a traditional building. I live 300 miles from the nearest port, so that doesn't help. I also looked into the container sized temporary buildings used on construction site, and they are made from scratch (not from old shipping containers).
My understanding is that the us doesn't send all that much back to china, and that it was a problem for a while but wasn't the bottleneck until recently.
Anyways, right now the bottleneck isn't shipping containers in China, that was an early pandemic logistics story.
This sort of implies that it’s incredibly cheap to make the container, and/or it’s expensive to add that weight to the ship, and/or our ports are incredibly slow at loading empty containers onto ships.
Edit: e.g. chop them, pack the result into containers, and ship it to Asia to use as raw materials for new containers.
The answer to China being better at 99% of manufacturing isn't subsidies, it's efficiencies.
There are so many insane distortions happening because of supply crunch that subsidies and trade nonsense are actually starting to become irrelevant. (though I really do hope USA sorts their shit out, their China policy is fucking up the world for zero reason).
“When you're designing an operation you must choose your bottleneck. If the bottleneck appears somewhere that you didn't choose it, you aren't running an operation. It's running you.”
The rest of the systems’ profits and sustainability seem to be secondary.
Perhaps it might make sense to ponder if this super-lean truck-centric infrastructure wasn’t running too close to its breaking point?
Might be a good idea for big-gov to lend a hand but also impose some top-down decisions like: long term you will be rebasing your logistics onto a railroad based backbone.
There, and you’ve magically created a couple thousands well paying jobs in infrastructure build and maintenance…
Also call some operations researcher to copypaste a couple tiered caching algorithms onto this mess.
Sure, randomly contrarian NIMBYs will fight to their last breath over anything, but one thing is an overhead train track, another is an oil pipeline with all the environmental hazards of an oil spill.
Of course, corruption and garden variety incompetence are a variable, but all large projects are vulnerable to that.
It's also not just contrarian NIMBY folks - there's plenty of pushback on putting lines through places for well-supported reasons. Nowhere is "the middle of nowhere." Someone lives there, often people who have been displaced to there because of bad policy elsewhere.
IIRC shipping recycled material was super cheap. So many empty containers. Might as well fill them with something.
Why aren't empty containers shipped back to China? Boat has to go back anyway, right?
Did the empty containers pile up because no one was willing to pay to ship them
Japan managed to arrest housing prices by moving zoning definition to national rather than local level, where local busybodies do not have the critical mass needed to do regulatory capture. Local areas can still decide what zoning to put where, but it's not nearly as ridiculously specific as American zoning can be. (e.g. you can sell lemonade out of your driveway, but not craft beer; or you can't run a hair salon, but you can run a daycare from your house, but only if you watch a maximum of five kids. etc.) California is now trying a similar tack by loosening zoning regulations at the state level.
Today the 2 container limit was temporarily suspended which essentially raises the limit to 6 containers - the max height at which most stackers operate. That's a 3x increase in empty container storage capacity which should give the system some wiggle room.
Tweet thread @ https://twitter.com/typesfast/status/1451543776992845834
A collection of workers who know their shit will always be much more valuable than an expert looking at graphs from his office if you know how to interact with them
Since it's on Twitter it's obviously partly a PR move but I wouldn't be surprised if it actually happened
> This is a negative feedback loop that is rapidly cycling out of control that if it continues unabated will destroy the global economy.
No, the global economy won't be destroyed because of backed up cargo ships in LA/Long Beach. Don't be ridiculous Ryan.
Just as the network can only have a relatively small amount of traffic actually "in flight" but lots can be stuck in buffers - so likewise only a relatively modest amount of containers can be on ships in the ocean.
You need a buffer or every little inconsistency reverberates and it gets out of hand, but bufferbloat shows how too much buffering makes things worse not better. If your metrics say (and some trivial metrics do) that the huge buffer is better, your actual experience contradicts that as everything feels like you're wading through molasses.
I don't have any relevant expertise to judge what the right metrics are for international shipping, but it certainly raised my eyebrows that "Let's make the buffer bigger" is seen as automatically a good idea.
Of course, a network buffer is very different from a container port's stacks, maybe this genuinely is going to make a huge difference. I think more likely it turns out to make no real difference, but can be portrayed as a genius idea that just wasn't embraced wholeheartedly enough to be effective.
In a way, it sets off more token ring-ish bells for me for some reason.
“Bufferbloat is the undesirable latency that comes from a router or other network equipment buffering too much data. It is a huge drag on Internet performance created, ironically, by previous attempts to make it work better. The one-sentence summary is ‘Bloated buffers lead to network-crippling latency spikes.’”.
Increasing buffer sizes (increasing the number of containers stored) can have perverse effects that make the situation worse - although it is obviously unclear what the effects in this particular situation could be.
Hopefully the Flexport CEO has read the situation and consequences correctly and his suggestion helps, although chances are it won’t help much. Alternatively it could exacerbate the problem e.g. stacking more than two high could slow down retrieval enough that it ends up being net negative because truckers are deadlocked.
Destroying empty containers is one type of dropped packet. Destroying or discarding container contents (e.g. food gone off, end manufacturer gone out of business, parts sourced elsewhere) is another kind of dropped packet.
Quite a few comments here seem to imply this is some obvious silver bullet to fix the problem, when clearly the problem is far more complicated than that.
I suspect that global supply chain actors follow very different dynamics from naive TCP congestion control implementations (i.e. additive increase, multiplicative decrease), of which Bufferbloat is an emergent phenomenon.
Also, the solution to bufferbloat isn't making the buffers smaller again (there is no generic "correct" buffer size as that depends on the end-to-end RTT, but this can vary across flows at a given choke point). What works is to either make buffers or the endpoints' congestion control algorithms aware of the phenomenon.
The downside at this point is that all the retail items for this holiday season won't be on shelves for christmas, so the damage done to brick and mortar sales industry has already been done
* The most capital intensive process of your business should be the bottleneck.
* When you find a bottleneck not of your making, overwhelm it.
Can you explain what this means? You find the bottleneck, then invest the most capital to improve it? Or whatever you're investing the most is the bottleneck? Or something else?
Say you run a factory making widgets, and the process has several steps. One of the steps requires a very expensive machine. That step is the most capital intensive. You want that machine to always be running at its maximum throughput. You do not want it to be idle waiting for some other step, otherwise that big capital investment is being wasted. When the machine is at maximum throughput then it is also your bottleneck.
Hence, you want the bottleneck to be at the most capital intensive process in the business, to maximise the productivity of your capital.
1) Container Height: 8'6". Add approx 4" for the lift slots on the bottom.
2) Forklift with 22' lift available from Sunbelt = 3 Container Height / 50% increase in yard capacity https://www.sunbeltrentals.com/equipment/detail/1044/0550320...
3) Common "construction" type forklift with 39' lift from United Rentals = 4 Container Height / 100% increase in yard capacity. https://www.unitedrentals.com/marketplace/equipment/forklift...
And United has forklifts with even higher reach available.
Logistics can be somewhat thought of as a flow problem.
If demand far exceeds supply, and both supply and demand stay constant, the backlog will continue to get worse in severity over time.
For the problem to get better, either demand has to decline, or supply has to increase. However, the ability to expand supply seems limited in the short term. E.g. how long does it take to improve port throughput, or build new container ships?
Translating to the real world, think every ship stuck at the port removes another ship/containers from being able to pick up new goods which creates a self reinforcing problem.
Or thought another way, if the port can only unload 10,000 containers a day, and 20,000 containers a day are showing up, the number of backlogged containers will increase linearly with time.
Just yesterday we hit a record number of ships backlogged at the CA port, so I suspect this is exactly the situation we're in.
The free market will eventually solve by either supply throughput breakthroughs, or prices continuing to rise until demand destruction kicks in.
I want to lay a few stats out here. Retail sales has been ~20% elevated from 2019 levels since the pandemic started, primarily due to government benefits/stimulus checks.
Some is due to spending habits changing, but that's likely a smaller portion.
Check real personal income over the course of the pandemic.
Enhanced UI has ended, but it seems consumers are relying on credit now to maintain the same level of spending. It's not clear how long this will last, but it could be months, judging by the consumer loan data here.
Note that many consumers paid off debts with the stimulus, is why this chart dips at the end. But we're quickly climbing back. Given lower interest rates, it's likely this can persist a few more months at current trend.
I suspect this will end organically whenever consumer credit is maxed out, and demand falls. But at the same time, wages are increasing fairly rapidly now... Is it possible higher wages can continue to support this new level of demand?
Probably in part, but not entirely.
This shows the insane increase in personal income over the course of the pandemic.
Many made more money on enhanced UI benefits than in their line of work. This is a known fact.
People in this situation have more propensity to spend the marginal dollar than higher income earners. Spending as a percentage of income inversely trends with level of income.
It's true that some percentage of retail spending is spending shifted from other categories, but given personal income data, I doubt that's the primary cause.
Also keep in mind, there was mortgage forbearance, rent forgiveness, and student loan moratorium (which is still ongoing I believe).
Those factors don't show up in income, but will shift expenses from loan interest to goods most likely.
Everyone's been stuck at home and purchasing consumer items that would usually be bought in bulk and supplied by employers, restaurants, etc.
Claiming it's government spending as the cause and not covid as the cause seems silly
Shifts in spending from services to goods can only alter consumption patterns so much.
Here is the Fed data on services spending:
As you can see, services spending is equivalent to 2019 levels today, while goods spending is 20% higher.
Consider the level of fiscal stimulus, monetary stimulus through lower rates (cheaper credit), and expense reduction (moratoriums, forbearance).
The sheer magnitude of demand stimulation is frankly obvious, even without digging into the data. Of course, the data backs up this theory as well.
Saying it's "covid" isn't saying anything at all. You have to quantify what you're suggesting. What is the mechanism that can explain persistently higher goods spending? The data doesn't bear out substitution as the primary mechanism, either way.
You seem very intent on not considering that fact when it's the most obvious factor by a wide margin, with all of the data supporting it.
Are you aware of the size of federal deficit spending in 2020/2021? The level of monetary policy easing leading to more credit availability to consumers?
It's intellectually dishonest to attribute elevated retail sales solely, or even primarily to the substitution effect
So you could say that it’s the deficit (e.g. the big tax cut from 4 years ago) that precipitated to this.
My point is that “stimulus equals problems at the ports” is likely an overly simplistic answer.
Before the pandemic we talked about unfilled jobs looking for computer programmers and other higher paid positions. How many people moved from 'social' jobs to ones that required more skills but pay more?
That is not how I remember the world in 2019.
What does this mean? The individual containers are owned by carriers?
Could this be allieveted also by agreements between carriers (or a merger)?
Or is there some other reason containers are "sticky" to carriers?