DOT Announces $230 Million in Grants to Expand Ports, Increase Cargo Production and Delivery
We are all aware of the gridlocks and insane congestion being experienced by most ocean ports around the U.S. The most prominent being the southern Californian ports of Long Beach and Los Angeles. However, despite the grave news headlines everywhere, real progress is being made on the grounds of Long Beach and Los Angeles as they attempt to alleviate the major congestion present both in the waters and at terminals.
Improvements in Cargo Efficiency & DOT Grant
Reports show that there is increased fluidity and efficiency of container movement on port grounds, and that dwell times at the ports of Los Angeles and Long Beach have been decreased by 125% and 140% respectively, which is a massive improvement.
This huge decrease in dwell time is due to a variety of factors, but a key component has been CMA CGM’s decision to open their terminals 24/7 for operations, and by offering a $100 incentive for moving containers out of the terminal in 8 days or less.
So, the takeaway is – despite the fear that everything is getting worse, the truth is that things are rather improving (slowly albeit).
In an effort to keep the momentum of improving efficiencies happening on U.S. based ocean port grounds, the Department of Transportation (DOT) announced a $230 million grant for Port Infrastructure Development that will be used in 25 projects across 19 states with ocean ports. This grant is meant to go towards projects that will expand ports and increase their overall container throughput.
Effect of Congestion on Pricing
Pricing is largely dependent on supply and demand, and what most people don’t realize is that the gridlocks at the port end up increasing product prices for consumers as goods become scarcer.
When cargo sits on port grounds for extended periods of time, it creates major bottlenecks for other incoming cargo. This creates backups on the port grounds which result in gridlocks, and these gridlocks are not easy to untangle amidst a continuing import flood of additional containers from the dozens of ships waiting offshore.
This severe congestion means goods cannot make it to store shelves, which results in consumer prices rising as demand far outweighs the available supply of product.
What to Expect
The projects that this $230 million are going towards are by no means quick fixes. Port expansion efforts take a lot of money, resources, and time as ocean ports are forced to deal with a major “remodel” without pausing operations. In other words, updates must be made in small chunks over extended periods of time, meaning we may not see the benefits of this DOT grant until two years from now.
Keep in mind, as we all wait for this grant to be implemented in port updates, the federal government, carriers, port officials, and terminal operators are all working to create small changes in process on the port grounds to improve the overall efficiency of cargo movement (such as the around-the-clock operations change).
Please reach to our team at InterlogUSA for more information or questions you have regarding your shipping situation.