Boring Regulation Fixes Are the Way Out of the Supply-Chain Crisis

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Shipping containers are unloaded from ships at a container terminal at the Port of Long Beach-Port of Los Angeles complex in Los Angeles, Calif., April 7, 2021. (Lucy Nicholson/Reuters)

When something causes nationwide problems, it’s tempting to look for a nationwide response. The current supply-chain crisis is indeed causing nationwide problems, and many have looked to the Department of Transportation and other federal authorities for a solution. There don’t seem to be any on offer.

Now that he’s back on the job, Pete Buttigieg’s McKinsey instincts must be kicking in as he tries to craft a perfect plan to put the supply chains back together again. The truth is that there’s not much the federal government can do about many of the important issues. The problems we currently face cannot be eliminated by spending a bunch of money or ordering people to act differently.

What can help, however, is allowing people to make higher stacks of shipping containers.

That’s what the city of Long Beach did over the weekend. The city’s zoning regulations limit how high containers can be stacked on top of each other in storage yards. Those limits are two stacked containers or eight feet in height. The city said it will be waiving those regulations for at least the next 90 days, allowing four and sometimes five stacked containers.

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It’s possible that this zoning regulation is reasonable in ordinary times as an aesthetic concern, but it’s certainly not reasonable right now. The waiver of the regulation was spurred, it seems, by the actions of the CEO of Flexport, Ryan Petersen. Flexport is a freight forwarder that was founded in 2013 as a tech start-up. Petersen toured the Port of Long Beach and concluded in a Twitter thread that the bottleneck was container storage.

Here’s the situation: Containers can’t be loaded and unloaded because they can’t be moved. Ordinarily, at an import-driven port like Long Beach, a truck arrives with an empty container and trades it for a full container. Right now, there are lots of empty containers in the United States. The containers were filled with imports from East Asia and need to go back to East Asia to be filled again.

But the Port of Long Beach was not taking empty containers because it had nowhere to put them. If trucks showed up with nothing, they could take a full container away. But they couldn’t trade an empty container for a full one.

Since trucking companies couldn’t get rid of their empty containers, they piled up at storage yards. Once the storage yards were full, trucks couldn’t take any full containers because they had nowhere to put them. So the port terminals were full, and the storage yards were full, and things were at a complete standstill.

Lifting the container-stacking regulations means that the storage yards are no longer full. That will allow trucks to take full containers out of Long Beach again since they will have somewhere to put them. Once enough full containers get out of Long Beach, the port will be able to accept empty containers again, and the containers can begin circulating as they should.

Petersen suggested other ideas, such as creating a temporary container yard on government land and having trains and barges run shuttles back and forth between Long Beach and other nearby transportation hubs. These ideas should get a hearing. The goal is to get containers out of Long Beach so they can start circulating again. People who work in this field know what to do with containers once they get them, but that doesn’t matter if all the containers are stuck in one place.

This waiver isn’t a total solution. There are no total solutions. The waiver is a smart policy, though, based on the facts on the ground to help fix a specific problem that was causing a container standstill. These are the kind of fixes that will get us out of this mess. Not some nationwide strategy from a task force or a directive from the secretary of transportation.

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