Port of Long Beach Executive Dir. on 24/7 operation: ‘There’s no other option’

Mario Cordero, Executive Director of the Port of Long Beach, joins Yahoo Finance to discuss bottlenecks at ports as the holiday season approaches and imapct of the labor shortage.

Video Transcript

ALEXIS CHRISTOPHOROUS: This week, President Biden announced a deal for the ports of Los Angeles and Long Beach to operate around the clock, 24/7, to help ease a shipping container backlog and try to get those goods to stores in time for the holidays. California's Los Angeles and Long Beach ports handle about 40% of America's inbound containers. And joining me now is the executive director of the Port of Long Beach, Mario Cordero. Mario, thanks for making time with us. I know that you were present at that President Biden meeting yesterday. Tell us the situation right now at your port, and how long is the backlog of ship containers?

MARIO CORDERO: Well, thank you, Alexis. As you know, the gateway is a very significant gateway for the nation. And thus, the discussions we had yesterday with the president were very embracing of the fact that we need to do something to transform the national supply chain. So just to put this into context, as of yesterday, we had 52 vessels, container vessels, waiting in to get into either the Port of Long Beach or Los Angeles. So in normal times, there is zero wait. So I think, again, that puts it in the proper context in terms of the delays that we're seeing, which translates to costs in transportation and shipping.

ALEXIS CHRISTOPHOROUS: Absolutely. I want to talk about that backlog that you're talking about as we approach the critical holiday season where more goods are going to be flooding into our ports. Now, I know that your port has been operating around the clock for a few weeks now. Now you're going to have the Los Angeles port doing the same. When do you think we're going to start to see some real relief at the ports?

MARIO CORDERO: Well, this issue is a national crisis with regard to the supply chain, for that matter a global crisis. So it's rather complex. But on the other hand, I think that we're going to start seeing some easing on the container vessel wait time as the weeks ahead, as we move towards the end of the year. But this is peak season-- holiday shopping, which is a factor, but the root of the problem has been going back to the COVID era that we experienced and continue to experience in the global shipping community going back to the spring of 2020.

So again, just to put this-- you're seeing the containers that are moving in this complex, the nation's largest container complex. For 2021, that number is 20 million. And for that reason, the Port of Long Beach, even before the crisis, we've been talking about the need for a 24/7 mindset. So I'm very appreciative that the president now, given the crisis that we have, has really given direction for the industry to really move in that direction. It's going to be challenging. But on the other hand, there is no other option. We cannot remain in the status quo.

ALEXIS CHRISTOPHOROUS: We know that ports in Europe and Asia have been working 24/7 for a few years now. Why hasn't the US kept up with its counterparts overseas?

MARIO CORDERO: Well, you're correct. We're not reinventing the wheel here with 24/7. These containers, by the way, come from Asia. So I think there's a lot of factors involved. One factor is the cost, the cost of labor to retain in 24/7 cycle, particularly the night shift and the early morning shift. But then again, for those who question that, for me, the cost of doing nothing is not really an option given the delays and the transportation shipping costs that far exceed whatever the labor cost is. So last, I'd like to thank the men and women who work on the docks, the IOW, who've been working day in and day out since the pandemic and moving this cargo.

ALEXIS CHRISTOPHOROUS: Let's talk about those workers, who really have been front-line workers, when you think about it, throughout this pandemic. Are you experiencing a labor shortage right now, or have you seen an exodus of people who just said, I'm not doing this anymore, and that has left you with a labor shortage?

MARIO CORDERO: Well, there's no labor shortage on the docks. And I'm referring to the IOW men and women who work on the docks. Now, there is a labor shortage in the supply chain when it comes to truckers and people who work in the warehouses and the distribution centers. So it is challenging. Everybody's been impacted by the labor shortage. But with regard to the people who are on docks moving the cargo, loading and unloading cargo, there's no shortage there, which is the reason why we believe 24/7 is the right option in terms of what we need to do going forward.

ALEXIS CHRISTOPHOROUS: Do you think, especially after meeting with the president yesterday, that operating these ports in the US 24/7 is going to be the way it is, even when we come out of this pandemic?

MARIO CORDERO: Well, the forecast in terms of the continued growth of containerization, particularly in this gateway, is going to exceed 20 million. So even after this pandemic, that 20 million number is not going to get any less. So obviously, as we go forward, you cannot operate a port with the model of yesterday. We've got to implement the model of the 21st century. Like you said, it's nothing new here. Asia has, in fact, implemented this.

ALEXIS CHRISTOPHOROUS: Can you give us a little more insight on what happened behind closed doors yesterday with President Biden and what kind of support is he and his administration extending to your port and the Port of Los Angeles?

MARIO CORDERO: Well, it's tremendous support. I think the president-- and we also met with Secretary Buttigieg, who was part of those meetings. So clearly, the administration has honed in or weighed in on the importance of the port authorities in the supply chain. So on that note, it's very welcoming that we have an administration that really is addressing this issue. So I think that given the president's directive, we had many stakeholders in this meeting by way of virtual settings-- major BCOs, FedEx, UPS, Home Depot, you could go down the list. And everybody committed that we're going to do something to change to have these extended hours to move the cargo. So I think from my perspective, there were substantive and very successful talks in terms of getting people to collaborate and work together throughout the supply chain.

ALEXIS CHRISTOPHOROUS: You talked earlier about what a complex system this is, and we learned recently that large, big-box retailers who can afford to do so, like Costco and Walmart and Target, are getting their own cargo ships to bring things to port. Has that actually added to the clog or made things more complicated, or is that actually helpful for you?

MARIO CORDERO: Well, it's helpful in terms of moving the containers from Asia to the West Coast here in the United States. However, as you referenced, it's the perfect storm. One of the things that I think we have to realize-- that the economy is moving in a very positive trajectory, 6% GDP growth year-to-year expected here in 2021. And the consumer demand-- obviously, e-commerce and what the American consumer is doing has been an eye-opening kind of situation in terms of the consumer demand here, but including the fact that e-commerce-- 20% increase in online buying.

So many factors that have attributed to the volume here. So the good news is we have a very healthy economy. It's getting better. And of course, what we need to do to transform to get ready for what's to come even after the crisis in terms of the containerized demand here in the United States.

ALEXIS CHRISTOPHOROUS: While going 24/7 is certainly welcome news, some are saying this should have happened weeks ago. How confident are you that the goods that need to make their way to consumers by this holiday season are actually going to make it on time?

MARIO CORDERO: Well, you mentioned for the Port of Long Beach, we implemented with one of our terminals a 24/7 pilot project weeks ago. So we're pleased that, again, we're starting to see it. This is what we need to do. Now, in terms of the consumer, my recommendation is you start shopping early for the Christmas shopping or the holiday shopping. There's going to be continued delays.

But on the other hand, we're going to see some substantive steps and making improvements on this. So again, it's very challenging. But the good news is we're going to start mitigating what we're seeing here not only in this port gateway, but in other major gateways in the United States and in the world.

ALEXIS CHRISTOPHOROUS: And it's desperately needed. We thank you for the work you're doing. Mario Cordero, executive director of the Port of Long Beach, thanks so much.