Why Aren’t the Cargo Ships Waiting to Unload in Southern California Going to Oakland?

Given the current supply chain crisis, you’d think that those cargo ships waiting in line for the Southern California ports would sail north to congestion-free Port of Oakland. Even if it’s not part of their usual contract, surely they could temporarily arrange alternate routes, especially since the Port of Oakland is asking for more cargo ships. Furthermore, Oakland has a rail terminal, so there’s no need for truck drivers: containers can go straight from ships to railcars.

Does the Port of Oakland have enough spare capacity to take all the cargo ships lined up in Southern California? No. But why aren’t the shipping companies taking up all the capacity which is available?

The supply chain crisis is a combination of long-term problems, such as non-union truck drivers, after expenses, earning less than minimum wage from port work (which explains why most truckers refuse to work in ports) (and there aren’t enough union truck drivers, or rather, the ports don’t contract enough union truck drivers because they don’t want to pay union wages). With these accumulating problems, this crisis was going to happen at some point. The pandemic is just one more straw on the camel’s back.

If the people who controlled cargo shipping—that is, the shipping lines and the ports—were interested in a functional supply chain, they’d shift some of the cargo traffic to Oakland.

The crux of the matter is: the people who have the power to ameliorate the crisis make more money by keeping the system broken.

As Ryan Johnson, a truck driver, says:

What is going to compel the shippers and carriers to invest in the needed infrastructure? The owners of these companies can theoretically not change anything and their business will still be at full capacity because of the backlog of containers. The backlog of containers doesn’t hurt them. It hurts anyone paying shipping costs — that is, manufacturers selling products and consumers buying products. But it doesn’t hurt the owners of the transportation business — in fact the laws of supply and demand mean that they are actually going to make more money through higher rates, without changing a thing. They don’t have to improve or add infrastructure (because it’s costly), and they don’t have to pay their workers more (warehouse workers, crane operators, truckers).

The crisis prompts people who need shipping to pay higher rates to jump the queue. That means more money for the shippers. But it doesn’t give them an incentive to move goods faster.

North America’s railroads have their own share of problems (including underpaying/overworking employees to the point that they are less reliable) but one thing the railroads do right is that any freight railroad can take the cars of any other freight railroad. That means if a railcar of Company A needs to leave the port, but the next outbound train engine belongs to Company B, then Company A’s railcar is attached to Company B’s train engine and Company A pays Company B a fee. The freight railroad companies have these agreements because it gives them more flexibility and allows them to, on average, move stuff faster at lower cost.

The port trucking companies do NOT have this kind of agreement for truck chassis, which means only a truck driver using a chassis owed by Company A can accept a container shipped by Company A, even if the only chassis available belong to Company B. This snarls up the system.

The West Coast of North America has a bunch of cargo ship ports. Even San Francisco has Pier 96, a cargo ship terminal within city limits right next to the main warehouse district with a freight train link. Yet when I look at Pier 96 from the hilltops, it looks quiet. What gives?

You see, Pier 96 can only take the smaller cargo ships. Dredging Pier 96 so it could take larger cargo vessels would cause great environmental harm (as in, destabilize the coastline and threaten nearby buildings), so it’s illegal. However, the major shipping companies favor giant cargo ships… and because of the environmental problems with dredging ports large enough to take them, the West Coast only has a few. That is one of the many bottlenecks which make the system fragile. Having more small cargo ships in the fleets would increase the system’s resilience.

(I suspect that Pier 96 will be crucial in the future. Sea level rise threatens to ruin the Port of Oakland, but Pier 96 is better protected.)

But the Port of Oakland can take giant cargo ships, up to Triple E class / 18,000 TEU. (That’s bigger than the maximum ship size allowed to enter the Panama Canal). Though the absolute biggest ships can only unload in ridiculously large ports such as Long Beach, most cargo ships can unload in Oakland.

A few cargo ships are, in fact, skipping Southern California and going to the Port of Oakland instead. But only a few. I don’t entirely understand why. When I dig into this question, I find answers like ‘if the ship stops it Oakland it will take more time for the ship to return to Asia’ (and waiting for weeks in Southern California doesn’t take time??!! Isn’t it faster to go to Oakland and unload within a day or two and then return to Asia??!!!)

My suspicion is that the real motive is money. The shipping companies are making big profits off the crisis, so they want to prolong it. Thus, they give bullshit excuses for bypassing Oakland.

The only force which could (partially) resolve this crisis in the short term is the national government. No, they can’t fix the system all at once right away. But the government could mandate higher wages for truck drivers, port workers, and warehouse workers. The government could mandate minimum staffing levels for the ports. The government could use war powers to increase the production of chassis, and since the supply chain crisis is impacting the military’s ability to get supplies using war powers is legally justified (and even if greedy shipping companies pay lawyers to file injunctions, voters will side with whoever decongests the supply chain).

So far, I haven’t witnessed the government doing anything which could make the supply chain crisis less bad in the short term. The shipping companies make more money by letting the problem fester. Therefore, I expect it to fester for months, if not longer.

UPDATE/EDIT: This article says that port operator mistakes (including IT glitches) and shitty treatment of truckers are creating much of the congestion. Additionally, the article explains that shifting cargo originally bound for Long Beach to Oakland messes up trucking schedules. However, it seems that truckers would cope with changes in destination port if the port terminal operators communicated better.