Fixing The Ports.
Port congestion is the latest in a two-year series of disruptions pressuring supply chain leaders. As of late September, more than 60 container ships were waiting at anchor in Southern California, and the wait time to unload is up to 3 weeks per ship.
This disruption has driven economists at Goldman Sachs to reduce their US growth forecasts by 15% in Q4. With backups a particular and persistent problem at ports in California (LA/ Long Beach, Oakland), New York/ New Jersey, Georgia (Savannah), and South Carolina (Charleston), retail leaders have even gone as far as suggesting naval facilities be opened for commercial unloading.
At a tactical level, this puts even greater pressure on already strained domestic distribution centers to further cushion the overall supply chain. Potential solutions will include building even larger inventory levels, ad-hoc 24 hour receiving operations to prepare any time a container does arrive, and absorbing irregular massive peak receiving and shipping demands with potential same-day/ shift receive to ship operations.
A long-term strategic program of automation and artificial intelligence (AI) is necessary in our ports. While all ports in the US are completely human-operated – from gantry crane and transport truck, to stacking crane operation – modern ports should be completely automated, both for crane operation and yard transportation. One analysis of the fully automated Port of Rotterdam (the largest in Europe by annual tonnage) showed a potential 80% improvement in productivity by using automation compared to Oakland, CA. This is a serious challenge for US ports which continue to face challenges automating, including stiff resistance from labor.
Further, modern AI/machine learning (ML) technology should be used to develop productivity and planning models to drive prioritization and timing. With more accurate predictions of unload time and container readiness, coordination across the supply chain, including drivers and distribution centers will improve drastically. Given the massive investments of capital in the supply chain technology space, this capability is available today.
The US Government has worked with port operators to push for longer hours of operation, if perhaps not the necessary 24×7 operation. While this is a logical and necessary step to get us through the immediate challenge, it is not a long-term, or effective solution for this challenge at hand. The role of the government will be to mandate the implementation of automation and artificial intelligence, and to balance the demands of the controlling unions with the national supply chain stakeholders.
Consumers are depending on it.
By Roger Counihan,
Chief Revenue Officer, CognitOps
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