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Joe, did you know you can buy a container gantry crane on Ali Baba?
Oh?
I think I saw that. How much is it?
They have different price points as you might imagine, but I'm looking at one right now that's thirty seven thousand to twenty eight thousand. Ooh, and it's customizable. You can change the color.
Some of those prices for like industrial equipment on Olive Bob are so cheap that like, I cannot believe they're real.
I think they are.
Real, which is sort of the scary part, or at least in terms of from the perspective of an American industrial perspective. I think in many cases they are actually real, but I still can't believe what's theoretically available. I did a dead list.
I'm both the most popular trader and most successful trader at Citadel that is going viral, uh barges.
This isn't after School Special, except.
I've decided I'm going to base my entire personality going forward on campaigning for a strategic pork reserve in the US.
Black goals.
These are the important questions that robots taking over the world.
No, I think that like in a couple of years, the AI will do a really good job of making the Odd Lots podcast. One day that person will have the mandate of Heaven.
How do I get more popular and successful?
We do have.
You're listening to lots More, where we catch up with friends about what's going on right now, because.
Even when the Odd Lots is over, there's always lots More.
And we really do have the perfect guest. I'm very curious, why would you need a gantry crane in a specific color? Like is branding very important for these things?
I don't know, you know who might know?
Oh?
Yes, So we have with us Jean Soroka, the executive director of the Port of la which is the busiest port in the US. Welcome back to the show.
Gene, Tracy, Joe.
Good to be here.
So one of the reasons we wanted to talk to you is, obviously there's a lot of confusion about what's going on with trade policy right now. And you know, we talked on the show about the potential for empty shelves in America if goods aren't coming in any longer, and so I really wanted to go kind of directly to the source and figure out exactly what is going on in terms of imports right now, so we thought you are the perfect person to catch up with.
Your timing is impeccable because over the last seven days here at the largest port in the Western Hemisphere, we've averaged five container ships a day. Normally at this time of year, it would be about ten to twelve ships in port every single day. Right Subsequently, job openings for our dock workers are down almost fifty percent over the last several weeks.
So this is really interesting because you know, on the one hand, we've had the delay in tariffs, the ninety day delay, and who knows what's going to happen after that, So you expected to see a drop in traffic in April and early May. But on the other hand, you could see some front loading of traffic going into the port as people try to get ahead of the new deadline. But that's not what you're seeing right now.
No, not at all. And the thing of this is tracy that thirty percent tariffs is simply an average, and that's still really high. A lot of American importers simply slammed on the brakes when they saw the one hundred and forty five percent and after the Geneva meetings it was said that they dropped down to thirty percent. That wasn't met with a lot of enthusiasm in the import community. So you've still got some cargo coming in. Folks went back and scooped up what had been manufactured. Others let
orders complete that cycle before shipping out. But what I'm not saying are a lot of new orders because ninety days is a short period of time in our business. That's traditionally how long it takes for an importer to put that paperwork into a factory in Asia, make the product, and simp we get it ready to ship to the United States. We're a long way from there.
That's really interesting because in a lot of the conversations that we've had, you know, they're long cycle orders, right. So you know, you talk about retailers and they're thinking about October, or they're thinking about Halloween, or maybe they're thinking about Thanksgiving, or maybe they're thinking pretty soon they're going to be thinking about Christmas. I guess from that perspective, a ninety day window for some retailers, it must be
a pretty big risk. If you're a big retailer, maybe you can like take the risk that like, yeah, you know, they'll probably extend it again, et cetera. But I guess, you know, for smaller ones, like that's probably not enough certainty that they're not going to end up with a bunch of goods that they have to pay a huge bill on at the end.
That's right, Joe. And the majority of the companies that import through the Port of Los Angeles are small to middle sized business.
Well wait, I didn't know that. Explain that form.
Yeah, yeah, we got one hundred and twenty five thousand companies that call LA's Port home for all their imports. And we know the big box retailers, the whole home improvement stores. An equal amount of cargo comes in as parts for American factories. But of those one hundred and twenty five thousand importing companies, the great majority are those smaller to mid size, even family businesses. They didn't have the wherewithal in some cases to be able to frontload inventory,
push carrying costs out, or get extra warehousing. So they're still having to make the choice right now to buy at these extraordinarily high levels. And I call thirty percent extraordinarily.
High, because if they do.
Bring those products in they're likely not going to be able to pass on those costs to their customers because they become uncompetitive with the big guys.
This is something that we hear over and over again in the tariff discussions, which is, you know, for the big guys, they have certain levers to pull, as you point out, they can frontload some of their orders because they have to capital the cash to get through that, or they could try to negotiate prices with their suppliers things like that. But the smaller guys seem to really struggle here.
That's exactly right, and what we're hearing on the ground. There's a part supplier for the big three automotive companies in Detroit that's right up the freeway from us here at the port, and they're telling me that their effective terrif rate is fifty seven and a half percent on these auto parts that go to the plants. Now here's the dilemma. If they slow down too much or stop buying because fifty seven and a half percent is too much, they run the risk of shutting a factory line down
back in Detroit. If that happens, it costs the auto manufacturer between two and four million dollars an hour in lost sales, wages and cost structure.
It's unbelievable.
Actually, we sort of curious about Port of Los Angeles corporate structure. You mention the dock worker job listings are current lead down, what is the structure, who employs them, who's putting up those listings. If someone is a dock worker, what company are they working for? And what company is and what are those companies' relationship to your entity? The Port of Los Angeles.
Jo the dock workers the International Longshore and Warehouse Union fifteen thousand strong members here at the twin ports of Los Angeles and Long Beach are hired by the Pacific Maritime Association. Okay, that's a representative group covering seventy five companies in our industry. Think of the shipping lines, the marine terminal operators, and the maintenance and repair companies. So each one of these terminals, every morning and every evening wants to bring on the dock workers to work at
their facility. Here at the Port of Los Angeles, we're a city entity, the Port Authority, if you will. Our job is that of a real estate company to lease out property to these international and national trading interests to promote trade through this eight way.
So on this note, I mean, one of the things I wanted to ask you about is how you personally at the Port of la are actually dealing with forecasting and coming up with your business plans for the rest of the year, because it just seems, I mean, it
seems almost impossible at this point. You don't know what's going to happen with the deadline, and then on top of that, you're not really sure what's going to happen with shipping because maybe people front load and traffic goes up, although it doesn't sound like that's happening, or maybe traffic goes down because people are just nervous. It seems really, really difficult to make any sort of plan right now.
To your point, Tracy's, traditional forecasting is super difficult right now. But because we have a great information system, deep relationships in Asia, and contacts that span nearly four decades in
this industry, we're able to predict quite a bit. For example, last month in May, seventeen vessels were canceled that eliminated two hundred and twenty five thousand container units coming our wayp off was so great that the first time in memory, I can remember that the month of May had lower cargo volume than did the month of April, down sixteen percent, when we otherwise should be going up toward peak season.
The month of June, we'll have an additional ten vessel sailings canceled, so I can work from that kind of parameter right now. But we're in the midst of our budgeting season here in the City of Los Angeles. We're trying to make sure that we have everything lined up, from proper staffing and training of the workforce all the way to how we're going to carry out these infrastructure projects, digitalization, cybersecurity, as well as our investment and the sustainability programs that
we have. Fortunately, we've got a very strong financial policy for the last ten years, so we'll be able to continue our investment through cycle. But the forecasting end of this is really sketchy.
So obviously, the first of our time we talked to was in twenty twenty one, I think, you know, during the peak of when everyone was focused on the log jam at the so there was so much stuff coming in and there was all of this talk about, oh,
there's this big traffic jam and backup et cetera. When the Turffs first got announced and then there was some talk of rolling back, some people were worried that we get a similar sort of phenomenon where maybe because of the pull ahead, et cetera, that we get another pile up that hasn't happened. But let's just say it did. Let's say something happened and there were a surge of
orders tomorrow, et cetera. Based on the experience of twenty twenty one and the stress of the twenty twenty one has anything changed fundamentally at the port such that a sudden spike of imports that were sustained. There are best practices that would be able to be put in place today to avoid that sort of bottleneck the same way, like, has anything changed or learned that could ameliorate an event like that in the future, Absolutely, Joe, And the first
thing we did was an inward look. What could we learn do better replicate from best practices elsewhere? And what we found was that we all started working closer together. We looked at what the root causes were. And again it's not this simple, but it's about the velocity. It's about how fast we can unload a ship and get the cargo on and off the port property quickly. That's what we didn't have in twenty twenty one when those one hundred and nine ships were lined up. So what's
changed in terms of your potential velocity today? Why should people think that it could be higher?
Well, it's much better. And I'll give you this example. During twenty twenty one, the average container that was to leave the port by truck sat for eleven days. Today that average container is sitting for three days. And that's been a trend for some time now, and I'm not just talking months. The average box that was going out by rail during that time period was thirteen and a half days. Right now it's just shy of four and
a half days. So we made a concerted effort to work with rail and trucking firms, importers and exporters to show them the value of speed when it comes to containers resting at any one time at our port. And it's been just a piece of work to continue to move forward with meaning that we can work the next ship faster, we can put more cargo through here, hire more dock workers and truckers to handle that volume, and
it's grown exponentially. The last point here is that because we started seeing front loading of cargo last summertime, we went ten consecutive peak season like months from July through April and not one ship was backed up. We moved more cargo during that time than we did at the height of twenty one or twenty two.
How many cranes for containers did you purchase off Ali Baba at that time.
Unfortunately, based on the opening back and forth between you and Joe Tracy, I have never seen a gantry crane in twenty five to thirty five thousand dollars sale.
Prece It is a little suspicious, isn't it.
They do come in different colors because companies have logos, they've got color schemes. Branding is really important in this business. But the average gantry crane on the ground right now, and we have eighty six of them twelve million bucks a fee.
These are must be little toy versions, Bowie. Why is branding important? I'm looking at every picture I have of the port of Los Angeles. They all look like the sort of very satisfying aquamarine or like a blue or something like that. Why is branding important in the logistics shipping business.
Well, just like it would be in clothing or footwear or for your favorite sports team, it really identifies the company APMT, headquartered in the Hague with their parent company Mursky and Copenhagen is a light we would call it a Carolina blue phoenix owned by CMACGM and Marseille France is red, white and blue, mirroring that French flag. And then we go over to Evergreen based in Taiwan and
as you could imagine, green gantry cranes, green containers. So that branding across an industry of maybe ten major players really identifies. As you see a box moving on a train off a ship of the truck through your city, you know who they are.
Yeah, I have to say I have a little miniature Evergreen container on it's actually it's a clean xbox.
I guess the green.
Yeah, and it's a very bright green ever Green's colors. Okay. So one of the things we've been talking about on the show is this idea that if imports into the US are slowing down, eventually you might see some shortages or at least lack of options at stores. Let's put it that way. When would you expect the slow down in containers shipping to actually hit the shelves and affect the American consumer.
Later this summer tracy. And this is why when we've seen sixty different announcements on trade policy and tariff since January, even the most seasoned professional is having a difficult time
keeping up with this. But I think one thing is consistent that with high tariff levels and increasing prices to the buyer, folks just slammed on the brakes, hit the pause button on business and hiring capital investments and said, let's see how this thing shakes out, because there could be new information that out in two hours, two days, or maybe even two weeks. Not sure how this is all going to end, So I'm going to buy the
bare necessities. And we're seeing that now with these single digit container ship volumes at the Port of Los Angeles on a daily basis, So likely we'll see fewer selections on store shelves and online buying platforms and higher prices.
Fulfillment rates will also look different. If a blue, red, and white shirt option are not moving at high levels, you're not going to see them replenished, just a top off inventory, but you likely will see the item that's selling get a backfill, and that just looks different from a supply chain perspective right now. The month of May that just closed would normally see a flurry of purchase orders over to Asia factories getting ready for the year
end and Christmas holiday seasons. We're not seeing that at this point.
All right, Well, Gene, thank you so much for coming back on and giving us an update on what you're seeing. It was really good to get your perspective.
Tracy Joe great bey with you again. Thank you face Gene Joe.
What color should my crane be?
Some nice yellow or something?
No, not yellow, bright red, pink.
Pink, pink.
I wonder pink crane.
That would be deciding.
I think that'd color and logistics very much.
Yeah, I agree to you.
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