Three years ago, the world was experiencing the chaos of multiple supply chain disruptions and delayed shipments. Construction projects were delayed because shipments of steel, lumber, and other materials were stuck in transit. People waited weeks, sometimes months, to receive replacement parts for their automobiles. Delays and shortages made prices rise, which in turn exacerbated inflation.
Two major factors contributing to the supply chain disruptions were the ports of Long Beach and Los Angeles in California. These major ports handle approximately 40 percent of all shipping containers entering the U.S. Both are major conduits to the nation’s trade with Asia and Latin America. During the worst of the supply chain disruptions, up to 100 cargo ships were waiting off the coast, sometimes days, to be unloaded. Because of major pent-up consumer demand after the worst of COVID, Americans were purchasing items in record numbers. Products were flowing into the two ports clogging up the system of logistics, and the supply chain slowed to a crawl. Port infrastructure was revealed not to be able to handle sudden swells of traffic.
In addition to increased demand, cargo ships have grown larger. The newest cargo ships have triple the capacity that existed ten years ago. Cargo ship capacity is measured in how many 20-foot containers (twenty-foot equivalent units – TEUs) can be accommodated. The newest cargo ships that have been delivered now have a TEU of more than 24,000 units. Larger ships take a longer time to be offloaded, creating further delays, which puts more of a strain on infrastructure.
To address this problem, the U.S. Department of Transportation has launched the “America’s Green Gateway” project at the Port of Long Beach. An investment of $1.5 billion will expand the railway system at the port, which will triple the amount of cargo that the port can handle annually, roughly the equivalent of five million containers. It also will link the port to thirty rail hubs throughout the U.S. and streamline rail operations, thus reducing congestion, environmental impact, and the pollution of trucks waiting to haul their cargo. Better safety will also be addressed by this project.
To many people, the America’s Green Gateway project would seem to be a project local to the West Coast. However, improvement at the Port of Long Beach will affect a great portion of American consumers. Both Union Pacific and BNSF railroads have operations at Long Beach, which connect the West Coast all the way to the upper Midwest and to the Gulf Coast. Whether they know it or not, millions of Americans are receiving products on their doorstep or buying them at stores that have entered the U.S. through Long Beach and have been shipped by rail to their final destination.
From an industrial standpoint, thousands of American manufacturers are receiving finished products or components from Asia and Latin America through the Port of Long Beach that keep them running on a daily basis. Supply chain disruptions hurt American companies and disrupt their ability to get products to consumers on time. During the worst of the most recent severe supply chain disruptions, it was evident how much various U.S. industries rely on container shipments from the West Coast.
The intermodal yard in the Santa Teresa, New Mexico, industrial base is one of the largest in Union Pacific’s system. Hundreds of thousands of containers are offloaded and onloaded onto cargo trains each year. Much of the cargo that has traveled west to this intermodal yard is coming from the Ports of Los Angeles and Long Beach. Likewise, BNSF has a large intermodal yard in El Paso, Texas that receives and ships cargo to the coast. Improving the rail infrastructure at Long Beach will improve the efficiency and capacity of these two intermodal yards.
Improved infrastructure at Long Beach will benefit the U.S. in general by helping to curb inflation. If companies can get their products to consumers more efficiently and economically, prices will drop and so will inflation. This will be welcomed by Americans.
I have long been an advocate for investment by the U.S. government in international ports of entry along the U.S.-Mexico border. Ports of entry are the lifeblood of trade and the prevention of contraband flows. Investment in seaports of entry is just as important. Trade with Asian and Latin American countries will not be going away in the future. The U.S. government is smart to invest in this type of infrastructure.
