The STUPID: ‘I Can Fix It!’


by Karl Denninger, Market Ticker:

This is flat-out dumb:

In an effort to ease the current backlog of ships waiting to unload cargo, they will waive enforcement of their current restrictions for at least 90 days. Their current code limits containers stacking to no more than two containers, no more than eight-feet tall. This is normally mandated to reduce the visual impact of the port on surrounding areas.

Now, up they will allow up to four stacked containers, with potential for five if a request is approved by fire officials.



There’s a jackass who has claimed to be Jesus running around Twatter taking credit for this, and claiming “he knows” this will address the problem.

No it won’t.

Yes, it is true you must identify the bottlenecks in any system that are throttling throughput.  But you must find and eradicate the actual causes, not make a hole bigger into which you can dump things.

What everyone is forgetting is the life-cycle of a container shipment:

  • The product is produced, and put into a container.
  • The container goes on a ship.
  • Ship travels.
  • Port unloads container.
  • Port loads (maybe directly with the above) onto truck or train.
  • Typically, if train, truck takes it from train yard to final destination.
  • Container is unloaded.
  • Empty is returned to be put back on the same company’s ship, or loaded with goods for export (to a place said ship will stop, maybe the point of origin)
  • Container reaches the origin point and the same cycle repeats, possibly with another unloading cycle.

The problem is that the containers are not getting back on the ships.  Well, why not?  Storing empties in the freight company’s yard will not get them back on the ship and you cannot wish more of them into existence on the other end.

The issue is right here in the United States; we have myriad problems here in the distribution system from beyond the port to the end destination.  If the goods cannot get delivered and the container unloaded and returned then it does not matter how many you stack in Long Beach.  Indeed stacking them can get stupid fast since you may turn one operation of loading a container onto a transportation device into many if the one you need is at the bottom of a stack!

All that is going to happen is that you will absorb a couple of days worth of containers and free up a few carriages which will immediately be filled, depart the port and fail to return on schedule with empty or for-export filled containers just like all the other ones have.

I get it that everyone would like to just wave a magic wand and make the problem go away.  There are people out there who claim they can — and have.  They’re wrong.  I may not be the CEO of Flexport but you shall see that going from a 2-stack to either 4 or 6 (depending on approvals) in the trucking company yards will solve nothing; the problem simply does not lie there.

The problem is that all the constraints have produced a labor shortage end to end in various places, including in warehouses, transportation hubs, drivers and similar.  As a result the freight is not being unloaded and the empties not being returned on schedule.

When the ship gets here and unloads its several thousand containers those containers must ultimately return to the source to be loaded again.  If the cycle is interrupted and there are none to load for the return trip then the source will run out.  Unloading more containers into a chain of events that is constrained all the way through does not accelerate the rate of return for the journey back to the source!

You have to return the cycle from unload time to the return of the empty to the port to its expected rate and time in-transit or you do nothing.  That means getting rid of the reasons that problem exists – which all revolve around labor and working conditions. 

Some of those have been building for quite some time but a hell of a lot of them are external and imposed by governments related to lockdowns, mandates of various sorts and similar.  The former ones building for quite some time will take some time to resolve but the others can be removed on an instant basis by the very government entities who placed them.

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