Cargo ships arriving at Port Hueneme in Southern California are jam-packed with fresh produce and other goods, as companies look to avoid the congestion that’s become the norm at Los Angeles County's major ports.
Yet Kristin Decas, the CEO and director of the Ventura County-based port, told Yahoo Finance Live on Thursday that they haven’t directly received any cargo from vessels waiting to enter the ports of Los Angeles or Long Beach. Those two hubs have become ground zero of the world’s worsening supply chain crisis.
“We wouldn't be able to just based on the capacity infrastructure that we have here be able to bring those ships here,” said Decas.
She explained that vessels offloading at L.A. ports move as many as 9,000 containers, whereas vessels visiting Hueneme carry around 1,500 containers.
As supply chain challenges being faced by buyers and suppliers continue, Decas made it clear that “Port Hueneme certainly can't be the solution to all the congestion that we're seeing in the supply chain, but we certainly can help move certain time-sensitive commodities.”
However, there is some discussion around implementing a short-sea shipping operation, where “feeder services out of the larger ports, take cargo off those ships and feed them into ports the size of Port Hueneme,” according to Decas.
As a record number of cargo ships clog key ports and threaten the supply chain, Decas noted that this “operation” could alleviate congestion, but it’s not cost effective. Shipping costs this year have exploded as the supply crisis deepened, adding to inflationary pressures.
According to Decas, the model hasn’t worked, “because of the double handling costs [associated] with having to move cargo off one ship, put it on another ship and then bring it to a smaller port and then do another offloading operation,” Decas said.
But in the midst of the national supply crisis, it could be a model worth exploring further, and working with the federal government and other partners for ways to subsidize some of those offloading costs, she added.
A help, but not a cure for California port congestion
Meanwhile, Port Hueneme has helped alleviate congestion in other ways.
Located near Oxnard, California, the hub is known as a smaller “niche” port that handles refrigerated cargo like bananas and other fresh produce, along with automotive cargo on roll-on/roll-off (RoRo) ships from Asia.
RoRos are cargo ships designed to carry wheeled cargo such as cars, trucks, semi-trailer, trailers and railroad cars. Those are then driven on and off the ship on their own wheels — or using a platform vehicle, such as a self-propelled modular transporter.
“We're finding that certain commodities are actually jumping on these RoRo vessels that traditionally would not do that,” Decas said.
Along with that, port officials have also seen “small tractors roll off these ships that traditionally might go in containers to the larger ports, [they] are actually just getting loaded as breakable cargo and coming on the RoRo ships,” she added.
Additionally, some vessels have opted to “pick up cargo coming out of Asia on larger ships and go on smaller ships destined for Hueneme” or have “shipping lines out of Asia charter vessels” to come through the port directly, Decas told Yahoo Finance.
While different avenues are being sought after as the supply chain snarls are weighing on economic growth for companies, Decas suggested that her port’s business model means there’s virtually no congestion.
Meanwhile, L.A. ports have been defined by idle ships and trucks lingering outside the gates waiting for cargo to transport.
When cargo enters the port, the containers are offloaded and transferred to private terminals outside the gate, where they are inspected.
“Cargo just moves through our gate to these various distribution centers and then they go out to market there,” Decas said, explaining that Hueneme isn’t seeing the “bottlenecking of trucks coming in to try and pick up that cargo or cargo racing out from one choke point into the marketplace.”
She added: “It happens at different extensions of our port at areas outside the gate.”
Finding ways to relieve the supply chain bottlenecks
Supply-chain bottlenecks clogging U.S. ports for months have forced businesses to seek alternatives. And experts warn that unclogging the flow of goods is easier said than done.
“Very few ports have the capacity of L.A. and Long Beach,” Nathan Strang, director of trade lane management at Flexport, said in an interview with Yahoo Finance.
Last week, Florida Governor Ron DeSantis floated the idea of ships mired in California unloading in the Sunshine State instead. However, Strang warned that sailing to alternative ports can also be costly.
The logistics would force shippers to “extend the trucking leg of their supply chain, change the warehouses where it's stored and generally create a more difficult route to getting cargo to its final destination,” he added.
Strang noted that transferring cargo from a larger vessel to a smaller one could be a viable option; however, it may “delay” deliveries — which doesn’t benefit the customer.
“What's important to understand is that things like the capacity of the port and the type of volume of cargo it can take, as well as the more complicated trade lanes involved in taking something from, for example, Southeast Asia to the Midwest all need to be considered,” Strang added.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv
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