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'Productivity has never been better' despite global supply chain concerns: Port of LA executive director

Gene Seroka, executive director of the Port of Los Angeles, speaks on the impact of China partially closing one of the world's busiest ports last week after a worker tested positive for Covid-19.

Video Transcript

[MUSIC PLAYING]

AKIKO FUJITA: Well, the continued shutdown at one of China's largest ports is threatening to disrupt shipping at ports around the world. The Ningbo-Zhoushan Container Port has been partially closed for more than a week now since an employee tested positive for COVID at one of its terminals. All this, of course, coming is here in the US, the Port of LA announces 12 consecutive months of growth.

For more on that, let's bring in the executive director of the Port of LA. We've got Gene Soroka joining us. Gene, always good to talk to you. We spoke to you two months ago when there was another shutdown at a separate port in China. Looking at what's happening this time around, what does the damage look like for the Port of LA?

GENE SEROKA: Minimal, but our first concern, Akiko, uh, is the health and safety of the workers, uh, making sure that folks are on the job and do the work that-- that's necessary. Not only are our eyes on Ningbo today in Central China, but factories throughout Asia, other ports and terminals as well. Making sure that we curb and eradicate this virus once and for all.

Ningbo represents about 3% of our weekly container lift coming here to the Port of Los Angeles. And please know that the Port Authority has asked that cargo normally moving through that one terminal slide over to the other three, and also the great Port of Shanghai, the Yangshan Deep Sea Port is only a three-plus-hour truck ride away. Uh, the industry will absorb this cargo, but again, our focus is on the workers and getting them back on the job in-- in good health.

AKIKO FUJITA: The stop and go that we've seen out of China is certainly emblematic of the uneven recovery, or the bumpy recovery, that's happening as a result of this pandemic. How has that disrupted, um, things at the Port of LA at a time when where you've seen some significant pickup, um, especially as we spoke last time. You've seen pickup up during the back to school season.

GENE SEROKA: Akiko, as you know, the supply chain has been choppy for three and 1/2 years, dating back to the ill-advised tariff policies of the previous administration in Washington, the unevenness that was brought by the end of that tenure, and then COVID-19. Our business dropped in the first five months of last year by 19%. And then the American consumer strength rose, and we've been off to the races ever since.

But really, every day were in the news and there's something that affects the supply chain, to some person or group in it. So we're doing our very best to be resilient, be able to pivot and move forward by carrying the cargo. Our productivity here at the Port of Los Angeles has never been better. We're welcoming and working 50% more ships per day than we were pre-pandemic times. And for every vessel that comes to the Port of Los Angeles, we're exchanging loads and discharge of 11,000 container units per ship on average. That's the best in the business.

BRIAN CHEUNG: Hey, Gene, Brian Cheung here. Are you doing all of that with fewer people? We know that this labor shortage has been impacting industries across the board. Obviously, longshoremen have also been a big story as we hear about these anecdotes of these, uh, ships that are kind of idling outside of your port. So, uh, first of all, are you still feeling a labor shortage when it comes to your business? And then secondly, uh, do you expect that to abate as we do get closer to the end of the year?

GENE SEROKA: Yeah, good question, Brian. Nice to see you as well. Three big segments of labor, as you know, here on the ground are dock workers. 15,000 strong members of the International Longshore and Warehouse Union have been averaging five and 1/2 to six days of work since the pandemic began and safer at home orders were instituted back in March of 2020.

We've added workers both of the apprentice, or what we call casual level, as well as registered A and B members. So we've got everybody out there on the docks working hard. We too, though, here in Los Angeles are watching the Delta variant very closely. We've had some illnesses, including breakthrough illnesses, but nothing to impede the work on the ground.

Second are our truck drivers. We have 18,000 that are registered to do business here at the Southern California ports. And we've got about half of those that call the ports on at least a once a week basis.

They're our truck drivers. We got to get them better turns. They're averaging about 2.1 tons per day. They need more than three to break even on their financials, and anything over that, hopefully, we can get them into good middle class wages. We've got to loosen up the gates and get more turn times. Yes.

AKIKO FUJITA: Go-- go ahead.

GENE SEROKA: The third segment is in the warehousing complexes, and that's where we're feeling the pinch, Brian, just a little bit. We've got a lower number of teams working and fewer in those teams because of the medical requirements of physical and social distancing. We've got to look at expe-- extended hours in that group as well. It's about two billion square feet of warehousing from the Pacific Ocean to the desert region in California.

AKIKO FUJITA: Gene, you put out some new numbers yesterday. I mean, the good news is that, uh, you've got cargo volume up nearly what, 40% here compared to 2020 levels. But-- but you've essentially, since the beginning of the pandemic, been in a bit of a catch-up mode. One of the things that-- that stood out to me is you talking about the-- the tight, um, space that you have in terms of warehouses and being able to house inventory. How are you sort of moving things around to-- to handle that part of the equation?

GENE SEROKA: That is the most complex piece of the entire equation. Factory output in Asia is as high as it's ever been, but they're still behind in orders. Ship space is not enough even with 99 and 1/2 of all vessels deployed worldwide and in our trans-Pacific arena. We've got 32 ships at anchor today awaiting berthing space, yet our productivity is higher than ever.

It's kind of like squeezing 10 lanes of freeway traffic into five. Really where it all starts is that the folks who are importing need to pick up their cargo faster and digest it into the domestic supply chain a little bit more quickly than we've been doing. There were 50 miles of trains outside the-- uh, the Chicago's suburban rail facility just a week ago. We've got to get that cargo move through so we can get more capacity on the ground here in LA to bring more ships. It is just a continued replenishment concept from major retailers, small and large alike.

BRIAN CHEUNG: And then, Gene, lastly, we've been talking a lot about China. You know, Yangshan, Ningbo, obviously all of those, you know, ports are in focus, but it's not just China. There reports all over, uh, the world in areas that might also be getting ravaged by the Delta variant. Is there any sort of concern from your vantage point that there could be other port shutdowns in other critical markets as well that could impact what you're seeing over there on the West Coast?

GENE SEROKA: Yeah, we're watching this every day, Brian. And again, with respect to Ningbo, it's one terminal out of four. There is capacity to absorb that cargo today. But the question is, what if? And what's next?

So we're watching very closely. We went through this in June, as Akiko said, down in South China with Yantian and-- and other locations around Shiwan, et cetera. We'll be watching Southeast Asia as well where we've had some outbreaks around the factory community. So this is not over yet. But again, every day we're facing something in the supply chain, and we've got to be resilient, pivot, and continue to move this cargo at even greater levels than we are today.

AKIKO FUJITA: Port of LA Executive Director Gene Seroka, I really appreciate the update. Always good to have you on the show.