No Escape from LA: Lingering Supply Chain Insecurity at Los Angeles Ports

A shipping blockage crippling the U.S. economy. A ruptured pipeline spilling oil into the Pacific Ocean. A White House rapid response team tasked with saving Christmas. These may sound like plotlines of the latest high-stakes Hollywood blockbusters. However, each issue is an emerging reality facing the United States in the midst of an unprecedented supply chain crisis at the Port of Los Angeles (POLA) and Port of Long Beach (POLB). Together, the two form the nation’s largest ports complex and serve as the gateway to 40 percent of all U.S. maritime imports. While some experts believe conditions will stabilize by early 2022, these short-term issues raise a deeper question: What is the long-term strategic risk of so much of U.S. trade flowing through one significant, but fragile, port ecosystem?

Q1: Why are the Ports of Los Angeles and Long Beach so important? What issues have arisen?

A1: The Los Angeles ports complex forms the largest shipping hub in the Western Hemisphere and the United States’ main shipping gateway to Asia, with over 90 percent of cargo handled coming from Northeast and Southeast Asia. The ports are a vital conduit for the import of oil, furniture, automobiles and components, apparel, and electronics as well as the export of petroleum products, chemicals, scrap metal, and agricultural products.

The history of Los Angeles’s centrality to U.S. imports began in the early twentieth century. The POLA was completed in 1909 and its sister POLB finished in 1911. As the southernmost large West Coast ports, the opening of the Panama Canal in 1914 solidified the POLA and POLB’s preeminent trading positions as stops for transpacific and transatlantic trade. Federal investments during World War II, totaling over $70 billion, enhanced the important positions of both ports as maritime and aviation products were shipped to the Pacific war theater. By the mid-1980s, the proliferation of trade from the General Agreement on Tariffs and Trade (GATT), coupled with bilateral port trade treaties with Hong Kong, Japan, Taiwan, and China, had yielded over one million container arrivals per year. The accession of China to the World Trade Organization (WTO) in 2001 boosted shipping arrivals even further, vaulting the POLA to become the busiest U.S. port.

Since the pandemic began, Covid-19 supply chain disruptions and changes in consumer spending patterns have taken the ports from busy to overwhelmed. Prior to the pandemic, West Coast ports were barely keeping up with global shipping demand with limited excess capacity. Just-in-time logistics meant arriving container ships often went straight to an open berth to unload cargo. Now, ships face wait times of around 10 days. Even when ships did have to wait, there would typically be around 17 ships at anchor offshore. That same measure now stands at over 100 ships as of late October 2021. As the United States enters the busy holiday shopping season, uncertainty remains over shipping issues in Los Angeles.

Q2: What are the security risks associated with so much shipping concentrated in Los Angeles?

A2: While recent supply chain bottlenecks at the POLA and POLB can be attributed to a spike in consumer demand, Covid-19 outbreak-induced production slowdowns, and persistent commodity shortages, the concentration of so much trade at these two facilities has long-term national security and environmental security implications. After 9/11, government officials recognized the value of the POLA and POLB as potential terror targets. A terror-related disruption to POLA and POLB operations risks the lives of thousands at or near the ports as well as billions of dollars in transported goods. As a result, POLA and POLB security was modernized and is now governed by a combination of federal, state, local, and private security agencies that jointly coordinate disaster preparedness, cross-border smuggling, and post-event recovery. U.S. House and Senate homeland security committees continue to regard port security at the POLA and POLB as key priorities, with members of Congress traveling to both ports in their oversight capacity in 2017 and raising port security concerns with U.S. agencies as recently as 2020.

Beyond national security impacts, however, the high concentration of shipping through the POLA and POLB has created significant environmental security impacts. Combining all land and sea vehicle emissions, the Los Angeles ports complex is the largest source of air pollution in Southern California. The California Air Resources Board (CARB) estimates that 120 premature deaths per year can be directly attributed to POLA and POLB diesel particulate emissions. Low-income communities of color nearby face some of the state’s highest cancer and asthma rates. CARB regulations have helped mitigate this environmental harm, but implementation is still limited with only 43 percent of arriving ships covered by state emissions regulations. Last month, the environmental security risks that POLA and POLB shipping concentration pose came to a head with news that the anchor of a waiting ship likely caused a recent oil spill that released up to 132,000 gallons of crude oil into the Pacific.

Though the economic impacts associated with the POLA and POLB are currently the focus of policymakers, these long-term national security and environmental security issues point toward the broader implications of POLA and POLB under-resourcing.

Q3: What has been done to enhance POLA and POLB efficiency? What more can be done?

A3: Since the start of his presidency, President Biden has made supply chains—including resolving issues at the POLA and POLB—a priority. After concluding a 100-day review of critical supply chains in June, President Biden established a Supply Chain Disruptions Task Force led by the secretaries of commerce, transportation, and agriculture to address near-term supply chain challenges. This announcement was followed by the appointment of Port Envoy John Pocari to coordinate the interagency and intergovernmental response to port congestion.

In mid-October 2021, President Biden intensified his focus on POLA and POLB congestion, inviting the ports’ management and unions to the White House. Commitments were announced to expand POLA staffing and unloading to 24/7, a service the POLB launched in September, and for major companies such as Walmart, UPS, FedEx, Samsung, The Home Depot, and Target to boost throughput—the time to get a given good through to customers—in their deliveries from the port. However, it is estimated these actions would move only 3,500 additional containers per day through year end, a fraction of what a large container ship can hold. California governor Gavin Newsom also signed an executive order suspending container weight transport regulations and opening state warehouses to counter storage shortages. Starting on November 1, the POLA and POLB will also start levying fines on shipping companies whose offloaded cargo waits at the ports for longer than nine days. These $100 per container fines, increasing in $100 increments per additional day of wait, are aimed at incentivizing quicker container pickups to free up port space.

With an eye to the longer term, the White House and Congress have proposed a $17 billion investment in port infrastructure in their bipartisan infrastructure bill. According to the World Bank’s Container Port Performance Index (CPPI), no U.S. port makes the top 50 most sophisticated global ports. Funding would enhance port structures, railway and track grading, and highways to accommodate more container movement to and from major ports. Investments would also upgrade port decarbonization, given that port-related CO2 emissions continue to rise far above other sectors. However, the $17 billion is arguably too small—especially when compared with the $66 billion in improved passenger rail and $25 billion in airport infrastructure funding provided by the bill.

While these short- and long-term actions help, they will be insufficient to solve this supply chain crisis and prevent another in the future. White House actions to boost throughput by 3,500 containers barely make a dent in the estimated 500,000 containers currently waiting outside the port. The POLA and POLB, like most other U.S. ports, also remain inefficient compared with other world ports. The POLA and POLB rank #337 and #341 respectively on the CPPI, largely because of resistance to automation and 24/7 operations in the U.S. port industry. In comparison, the Port of Shanghai’s CPPI rank is #47 and it can process containers twice as fast as the POLA during normal times.

But even if these oceanside issues are resolved, issues linger in port linkages to the broader United States. Labor shortages in the trucking, rail, and warehouse industries continue, limiting the number of containers that can be transported and stored cross-country. Limited past infrastructure investment means that the POLA and POLB lack rail connections to major distribution centers for companies like Amazon and Nordstrom in the California Inland Empire. Container and container chassis shortages in China and the United States mean that goods sometimes have difficulty even being packaged for transport. Each of these supply chain issues points to broader structural issues in U.S. shipping that will limit potential gains made at the POLA and POLB and suggests a short-term solution to current shipping congestion may not exist.

Q4: What alternative supply chains are there to trade through Los Angeles?

A4: While the POLA and POLB are the largest ports on the West Coast, they are not the only ones. The Ports of Seattle-Tacoma and Oakland are the other two largest international ports in the western United States. The Ports of Vancouver, Canada, and Manzanillo, Mexico, are also full-service West Coast international ports across national lines. Together, these six ports form the major North American gateways to transpacific trade with Asian firms (Figure 1).

The ports of Seattle-Tacoma and Oakland are viable alternatives to shipping through Los Angeles, with Oakland even launching a campaign for ships to dock at its empty berths over Los Angeles. Both ports rank slightly higher in CPPI efficiency, and their combined 77 cranes represent significant offloading capacity compared to the POLA and POLB’s 160. However, at Seattle-Tacoma, the West Seattle Bridge presents an air draft limitation of 140 feet for ships that is far lower than the air drafts at the POLA, POLB, and Oakland. Channel depth at the Port of Oakland is a limiting factor, with its berths unable to accommodate Post Panamax III class container ships that are increasingly common. Oakland also lacks direct on-dock rail connections from its terminals, limiting the throughput of the port to other U.S. destinations.

Moving supply chains through allied ports in western Canada and Mexico and land transport to the United States is another option. The Ports of Vancouver and Manzanillo are Canada and Mexico’s largest West Coast ports. Each also ranks higher in CPPI efficiency than their Angeleno counterparts and offers strong interior rail connections. While both have high container processing capacity, with almost 5.5 million containers processed by 39 cranes among both ports, their foreign locations add logistical complexity to just-in-time shipping to U.S. consumers.

Policymakers face a tough decision on how to improve port resiliency in the years ahead. On the one hand, policymakers can embrace a diversification strategy of expanding the capacity and competitiveness of the Seattle-Tacoma and Oakland ports while grappling with long ramp-up times and diminished economies of scale outside of the rich ecosystem of labor, transport, and warehousing in the Los Angeles basin. On the other hand, policymakers can go all in on enhancement at the POLA and POLB to boost efficiency, while shouldering the national security and environmental risks of moving so many valuable goods through one gateway.

The current status quo of limited focus on U.S. port infrastructure cannot hold. It is unclear if or when the consumer demand fueling this year’s supply chain issues will subside. But there will be another supply chain crisis at U.S. ports like the POLA and POLB one day, and the United States has clear economic, security, and environmental interests to ensure the next one is not as bad as the current one.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C. Aidan Arasasingham is a research intern with the Scholl Chair.

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2021 by the Center for Strategic and International Studies. All rights reserved.

Aidan Arasasingham

Aidan Arasasingham

Former Research Associate, Economics Program