Interview with LA Port Worker Reveals Why There's a Cargo Ship Backlog
An anonymous worker from the West Coast Port of Los Angeles came forward on “The Stew Peters Show” to discuss the claimed issues around the cargo ship backlogs. {Direct Rumble Link} As the port worker noted, based on his 18-years working there, there is no supply disruption on the unloading end of the supply chain; though they are a little backed-up, but the port is offloading at a high capacity.
The interview is interesting because the ground report contradicts the popular narrative about COVID impacts on the current supply chain. There are ample goods flowing into the supply chain from the ports, yet there are claims of shortages at the warehouse and distribution level. WATCH
Stew Peters accurately reminds his audience that no nation generates and exports as much raw material foodstuff as the United States. This is a key point seemingly overlooked by most media. The U.S. exports around $73 billion in food products annually. The next closest food export nation Germany isn’t even close at $34 billion.
In very general terms, about one-third of U.S. food exports are North/Central America (Canada, Mexico, etc) exports; approximately one-third go west (Asia) and about one-third go east (Europe). There have been no reported issues with those shipments departing the U.S.
However, one point worth noting, by the LA dock worker, is the influence of predictive orders or automated-purchases based on historic norms and patterns. I think that overheard note by the worker was somewhat misconstrued, and a correct interpretation could explain part of the backlog of container vessels offshore.
It is technically correct that large multinational importers use AI (artificial intelligence) to predict orders. However, it’s not something weird or as complex as it sounds. As supply chains have optimized computer assisted ordering has become the norm, you might have heard it referenced as ‘automated replenishment’.
Essentially, decades of manufacturer, retail or consumer scan data for all kinds of goods create a historic reference point for inventory needs. Large retailers use automated ordering to restock their warehouses with raw materials, interim assembly products (parts), and also finished goods. Prior sales data helps to determine or predict future ordering needs.
The advent of technology tracking has thinned the supply chain to a process of ‘just-in-time’ replenishment. This is JIT inventory management and now how most companies operate. The goal for Just In Time (JIT) inventory is for the new stuff to arrive just as the last of the old stuff is distributed or sold. This means you don’t have to carry excess inventory or tie up money in material waiting for consumer sales or manufacturing use.
AI automated purchasing is just a larger scale version of JIT. People involved in the supply chains and logistics simply facilitate and tweek the arrival/departure times by coordinating with suppliers and distribution on a frequency schedule. You watch the supply chain and make requests for slight modifications as you take daily use or sales information into account.
It’s not totally or fully automated; it’s more akin to computer assisted depending on the type of product being managed. However, it does become more automated every year, and there are less and less people who remember the olden ways of making predictive purchases/orders with human brain power instead of computer assistance.
That said….. Think about the economy suddenly grinding to a halt. Which, we will remind people, CTH said happened quietly at the end of May of this year.
April and May of this year was when the first batch of stunningly fast inflation prices on food, energy and gasoline hit the checkbook of working-class Americans like a thundershock. At the end of May and beginning of June the data was clear. We were seeing our first double digit inflation months in recent memory.
So, think about the impact of that massive first round of Biden inflation hitting the wages of 70% of American workers all at once. Spending priorities immediately change. Disposable income immediately shrinks. Consumer purchasing patterns immediately shift.
The consumer impact is sudden. However, the supply chain impact is more akin to slowing down a freight train with thousands of boxcars. It takes time.
What I would say, based on my experience in overlay with the conversation with the dock worker (Stew Peter interview), is that many of those off shore container vessels are full of goods that have already slowed at the consumption end. People have stopped buying some stuff, some types of goods, and those ships are carrying cargo that is no longer needed within the supply chain…. at least not at the rate within the automated replenishment system.
Part of the reason for the excessive container ships could simply be a reflection of a U.S. economy that has slowed so drastically that inbound durable goods are not needed by those on the destination side. As a consequence, there’s no rush for the importing corporation to take immediate control of the inventory.
This outlook would also explain why the worker was saying some of the delivery containers are just being stored full of goods without being distributed; and why the executives within the LA port were leasing additional storage space to house containers that were in no hurry to get picked up.
Back when import wholesalers were more important because they distributed to a larger population of smaller retailers, when this type of a scenario unfolded the importers then begin prioritizing durable good cargo that was needed more urgently, and they delayed the off-loading of durable good cargo that was less urgent. In modern days, there are less ‘wholesalers’ because small retailers have been replaced by massive multinational corporations and giant box stores. Those big corporations have their own in-house purchasing, supply chain and inventory management specialists.
[Note: Perishable cargo and fuel oil always get a priority offload regardless when they arrive in the port system.]
I can make a few calls and trace this down, but I suspect that’s essentially what is driving a significant portion of this backlog of cargo container ships that are not in a hurry to offload. Keep in mind, with Joe Biden inflation going bananas, that durable good inventory is going up in value even as it sits there idle. So unlike times when purchasing agents desperately need to turn the merchandise to get their profit, an increasing static inventory valuation simply becomes another reason for a multinational to be okay with any port delay.
If my suspicions are correct, that also means the U.S. economy is in much worse shape than financial media are reporting… another reason for the media to avoid telling the story of cargo vessels and instead deflect the story to imaginary COVID-19 supply chain disruptions. So there’s that.
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