SACRAMENTO, Calif. (CN) — The flotilla of container ships loaded with toys and household goods destined as holiday gifts idling near Los Angeles remains the centerpiece of the country’s supply chain quagmire, but another cargo logjam is looming onshore hundreds of miles north.
While the ceaseless traffic jams at the ports of Los Angeles and Long Beach have produced containers of irresistible cable news content, the Port of Oakland is desperate for business. Ships that traditionally unloaded in Los Angeles and stopped in Oakland to reload with the Golden State’s legendary produce are suddenly beelining back to Asia empty.
The global shipping trade has figured out the pesky logjams are worth the spiking price of consumer goods, and as a result, California farmers are now paying the price.
“The Port of Oakland is standing empty,” says Assemblywoman Mia Bonta, whose district includes the port.
Containers full of California-grown products are piling up in places like Oakland and Stockton, forcing the state’s massive agricultural industry to fly supplies to South America and ship tree nuts via rail across the country to Maryland, in a frantic attempt to keep their European markets satiated.
During a legislative oversight hearing Wednesday at the state Capitol, agricultural and retail groups described the trickle-down effect the port congestion is having on their industries and the state’s economy.
“We’ve lost markets,” testified Roger Isom, CEO of the Western Agricultural Processors Association. “The European Christmas is a big market; it’s now being filled by other countries.”
Supporting Bonta’s claim, Isom detailed for lawmakers how containers of almonds, pistachios and even wine are essentially trapped in Oakland and other ports that serve the state’s $50 billion agricultural industry. He said scheduled pickups are continually being dropped in recent months, forcing his members to pay millions in unnecessary storage fees.
Many farmers are taking a loss and if products continue to mature needlessly in storage containers and warehouses, the state’s reputation as the breadbasket of the world could take a hit, Isom said.
“We’re at the mercy of foreign shipping companies,” said Isom. “Somebody changed the rules on us, and we have no way to correct it.”
Isom’s testimony rankled Assemblywoman Cecilia Aguiar-Curry, whose farm-rich district is dotted with vineyards, rice paddies and tomato fields.
“We should be ashamed of ourselves that we are not exporting from California in a timely fashion,” said Aguiar-Curry, D-Napa.
Other ports in the northern part of the state are seeing less volume than usual, but convincing shipping companies to forgo Los Angeles is going to be a tall task, says Danny Wan, the president of the California Association of Port Authorities.
The ideal solution to clearing the logjam would be to send traffic to the secondary ports, but Wan says most would be unable to handle the uptick. The Los Angeles ports are fit for receiving imports and have the surrounding infrastructure to get product out quickly, along with the necessary supply of customs agents. Unfortunately, Wan said shipping companies view ports like Oakland or Stockton mostly as being economically unviable, as they have less access to railroads and interstate trucking routes.
“Some of the cargo is being diverted to other non-California ports,” said Wan. “That’s a disturbing trend.”
Wan said the port authorities, the state and federal government are working to encourage shipping companies to utilize other ports. In the big picture, he says fixing the crisis will entail infrastructure upgrades, workforce training and a better ability to track and relay shipping data in real-time.
Financial woes have also extended to California businesses, said Rachel Michelin, president of the California Retailers Association.
Michelin urged lawmakers to examine existing environmental regulations that she claims have forced businesses to build new warehouse facilities in more business-friendly states like Nevada.
“Let’s take a step back and look at all the regulations that have been passed over the last 10 years that impact the supply chain. Let’s make sure they’re actually working,” said Michelin. “It’s very challenging to keep up.”
Wednesday’s hearing comes as California’s shipping bottleneck continues to grab headlines in advance of the holiday shopping season.
Last week the Biden administration and state officials formed a partnership tasked with the goal of funneling billions for port improvements. The partnership has already announced $5 billion in loans to upgrade California ports.
Meanwhile state Republicans have ramped up criticism over the backlog in recent weeks and have called on the governor to call an extraordinary session to fix the crisis. The GOP wants Governor Gavin Newsom to order lawmakers currently on recess back to Sacramento for a closer look at whether state laws and regulations should be suspended or reformed to alleviate pressure at the ports.
So far, the Democratic governor has not called a special session but his administration did participate in the oversight hearing titled “The Perfect Storm: California’s Port Congestion and Goods Movement Crisis.”
Dee Dee Myers, a senior adviser to Newsom, said the ongoing port backlogs are a global problem years in the making. She noted the global shipping system is for the most part controlled by the private sector and that preexisting tariffs, the pandemic and recent increased demand for retail goods are all responsible for the crisis.
Though the state is actively working with the ports and feds on fixes, she reiterated there is no silver bullet available to lawmakers or the governor.
“It’s clear there’s no single cause and there’s certainly no single or simple solution,” said Myers. “We can only solve this crisis if everyone works together.”
Myers noted the state is easing weight restrictions for trucks, expediting new commercial license applications and identifying unused state property to temporarily store goods.
Asked by the committee whether Newsom would consider lifting environmental regulations during the crisis, Myers dashed the idea. She said not to expect a wholesale lifting of regulations but that new funding for port upgrades and activities will likely be included in the governor’s upcoming January budget proposal.
The committee’s co-chair said the Legislature and governor must respond quickly to the calamity and continue to make port upgrades a focus in the future.
“The simple answer to this crisis is that people stop buying stuff, but that’s not going to happen,” said Assemblyman Patrick O’Donnell, D-Long Beach. “The ships are full, the docks are full and the warehouses are full.”
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