An Unexpected Victory: Container Stacking at the Port of Long Beach

I think that there's a misunderstanding here: the rule did not apply to the Port of Long Beach, which has always stacked to reasonable heights, but to container yards in surrounding areas. On top of this I assume it applies only to small container yards (the kind owned by a trucking company that's little more than a patch of dirt to park their truck fleet), because you can't possibly operate a dedicated yard (the kind where major shipping companies keep their stock at, thousands of boxes) while stacking only two high.

This is not a nitpick, since the images of containers stacked 5 high make you imagine that storage capacity in the whole area just increased 250% overnight. I am highly confident this is not the case. The increase might only have been a few percentage points. Can't tell without more details on the local conditions.

Given this, I'd like to see some actual evidence that this is a panacea, as opposed to just a first step (still important!) in the long tower-of-hanoi logistics nightmare that clearing the bottleneck actually is.

One thing that is clear to me: untying this kind of knot almost certainly requires coordination from a higher authority than the individual companies (shipowners, truckers, exporters/importers), because those groups have goals and incentives that are at odds with each other in a situation like this.

(Source: I worked in the container shipping industry)

One thing that sticks out as a concern for scaling this up is the attention economy. It seems like this worked, in part, by Ryan getting a bunch of people ready to signal boost is tweet, and then leveraging that to get attention from a bunch of people to call the governor or whatever (I haven't recapped the details atm).

But, that basic technique is used all the time. And the problem is that people are doing it in multiple directions, sometimes at cross purposes. It's also pretty easy to convince me that a given cause is "good", but then the issue is how it compares to all the other things I could be doing with my attention.

People's attention is a scarce resource, and most of the forces that are trying to direct my attention here are Out To Get Me. If you successfully build a new system that can scalably allocate people's attention on things, that system would be a target for people to hijack and direct to random political stuff that matters less and we're back to square one.

I'm not saying that's an insolvable problem, but it's the first thing I think of when imagining "what if we tried to scale this process to solve more broken things?"

Has anyone found a way to measure the impact the of this change? It seems it should be simple to look and see that some throughput of containers has increased, but I have had no luck in finding any kind of dashboard for this data.

The closest I've come is marinetraffic.com, which still shows quite a lot of ships around the port of Long Beach. The same site shows a simple bar graph for "congestion", but it only shows 8 weeks of data if you register a free account, making it hard to see any trends.

(There's a free trial, which I may check out during the weekend).

Tl;dr: I love this story, but my expectation is that we're unlikely to find comparable problems to solve by a similar approach. If we can find one more roughly comparable example in, say, the next year or two, then I'll update significantly toward thinking we're missing some big wins. I'll try to remember to keep an eye out for such examples.

If your model did expect it, I’m very curious to know how that is possible, and how you explain the years 2020 and 2021.

There are two aspects to consider.

1. Why didn't the rule get changed earlier?
2. Why did the rule finally get changed? Alternatively, why don't the rules get changed more often?

For (1), my barely-informed guess is that before the port got backed up, the rule hadn't created any obviously significant drawbacks. Then, we did, in fact, have a failure of leadership in terms of recognizing a tractable solution to the problem.

For (2), this was a little-known rule with no defenders, tiny benefits, and (suddenly) massive, obvious drawbacks. Ryan Peterson demonstrated the leadership the situation required, and BOOM, problem solved. My guess is that this actually happens pretty often, but it usually doesn't make the news, or one of Zvi's blogposts, for precisely the same reason that the rule was able to be changed. It was a little-known rule causing a little-known problem, was changed basically in a timely fashion, and wasn't worth calling attention to. It wasn't interesting to people who don't think this is shocking, and wasn't controversial. For the same reason, this problem isn't getting much press either.

Ryan Peterson should absolutely get a credit banana for his efforts. I think this is an interesting story that we can learn from. I think our difference of opinion is that I don't anticipate that there's "treasure everywhere," in terms of lots of totally uncontroversial, obvious, low-hanging fruit waiting to be plucked by a quick change of the rules.

I think that there might be low-hanging fruit if you exclude the risk of PR problems, and allow that it would be obviously a good idea if you thought about it enough. But these are real barriers.

It might be that we can learn from Peterson, and that PR problems and framing challenges can be mitigated by a sophisticated messaging approach. So we then could say that our civilization is bottlenecked by a lack thoughtful, expert messaging laser-targeted on tractable wins.

If that's true, why? Is this hard to do well? Was Peterson just lucky? Is it rare to find high-stakes problems solvable by this approach? Is it an incentives problem, since Peterson may not be reaping much in terms of rewards relative to the value of his contribution?

A wild idea that I haven’t heard proposed, which won’t solve our short term problems but does seem like a good idea, is how about we create a new port? If I asked you exactly where not to try and hire a bunch of people and especially not to drive a truck away from efficiently, and also to not try to expand into more space and capacity for the future, in all the Western part of the land, I’m pretty sure that my two answers would have been Los Angeles and San Francisco. Not that they are bad places for ports, but they’re where all the people and high prices and land scarcity and traffic are right now.

Um, I don't really know for sure about Los Angeles, but the whole city of San Francisco is there because it's geographically a really good place for a port. And I would suspect that LA is the same way. Harbors create big cities. And then huge road and rail networks get built to serve them... over decades and centuries.

Even if a big container port magically materialized in Morro Bay (and I have no idea whether that's a suitable place from the ocean's point of view), there'd be no way to move the freight to or from it. But in fact you'd have to start by creating the infrastructure to move the material to build the port itself.

I mean, if you have a magic wand, then instead of moving ports that require massive infrastructure because people have cluttered up the areas with a bunch of software businesses that could operate anywhere, why not just relocate the software businesses?

Next target - occupational licensing

Libertarian version - remove almost all licensing. People use third party rating agencies to decide who to trust if they so desire.

Market version - remove almost all licensing requirements but require liability insurance. Insurance markets will effectively prevent unqualified candidates from practicing by pricing them out with expensive policies.

Better version of what we have now - Remove all degree requirements and test directly for competence. The test should be sufficiently thorough that passing it means you’re qualified. Every profession will have bootcamps spring up that teach you exactly what you need to know to be competent as quickly as possible.

Any of these approaches should dramatically lower the cost of most professional services.

Here is Sunday's paper in the LA times:

This rule was created, and I am not making this up, because it was decided that higher stacks were not sufficiently aesthetically pleasing.

So unless I'm missing something, the only source for this I can see here is the Washington Post article,

It turned out that the main problem wasn’t an absolute space constraint but a local zoning regulation. Long Beach prohibits companies from stacking off-loaded containers more than two high. The law is not a safety regulation but an aesthetic one. City officials decided that stacks of containers more than eight feet high were too ugly to tolerate.

and that's all it says about that. And, it wouldn't particularly surprise me if this was uncomplicatedly true, but it also wouldn't surprise me if a journalist is confused or simplifying the narrative.^[1]

Googling "long beach shipping container stacking zoning" quickly...

The Maritime Executive (which I've never heard of, name sounds like they'd know what they're talking about but that doesn't mean they're trustworthy) agrees:

In an effort to help relieve the pressure, the City of Long Beach has decided to relax enforcement of a longstanding ban on high-stacked containers on private property. For years, it has forbidden stacks of more than two boxes high, an aesthetic measure intended to preserve visual sightlines in the neighborhood. That rule will not be enforced for at least the next three months, and city lots that are zoned for container storage may now stack up to four boxes high (or even five, if they get approval from the fire department).

Also, Freightwaves (same comment):

The zoning restrictions were added to the city code years ago to minimize the visual impact of industrial equipment in neighborhoods. The temporary rule change only applies to properties that are currently zoned to store containers.

(Oh, hang on - does "industrial equipment" here mean the shipping containers themselves? I suppose there's no literal reason it couldn't refer to those. But to me that word suggests, like, cranes and other things that would be moving the containers, which would be a different motivation. Speaking of which... if a storage yard has been operating for years on the assumption it won't get to stack containers more than two high, will it have / be easily able to acquire whatever it needs to handle more than that?)

Ah! The official press release agrees too:

These provisions, which have been in effect for many years, were established to address the visual impact to surrounding areas of sites with excessive storage.

That's... probably more reliable than the others? But it also doesn't cite a source, and I'd guess the person writing it wasn't there for the enactment? So like, there's still ways it could be wrong.

Still, upgraded from "sure, plausible" to "seems likely basically true".

After talking to Elizabeth, and based on new information I've learned since this was posted, I've updated the OP to reflect what we've learned and avoid giving anyone the impression this change had a bigger impact than I believe that it did. The central points remain unchanged.

There were enough different changes that I'd like mods to reimport to ensure both copies reflect the same changes. 

4. This rule was created, and I am not making this up, because it was decided that higher stacks were not sufficiently aesthetically pleasing.

And when you see the works of old, fallen empires and wonder at their beauty, will you ask, 'did they fall because of rules to ensure aesthetic pleasure?' ('Is the modern world ugly?' 'And is it ugly because it is still alive?')

More seriously,

3. Understand how and why it happened.

seems to suggest it might be good to dig further than this:

8. Normally one would settle this by changing prices, but for various reasons we won’t get into price mechanisms aren’t working properly to fix supply shortages.

Later, though. This post has a point, and keeping it short is good for that. (While it has calls to action, like 'spread this story' it isn't just dedicated to spreading (being) the story.)

Thank you so much for writing this up, Zvi!

It's hard to actually be correct about the nature of the bottleneck in such a scenario, and harder still to find a workable solution. I suspect that a good part of the success of this effort was just that Ryan was actually correct about the nature of the problem and the nature of the solution. Beyond that, Ryan being head of Flexport probably helped a lot in convincing the initial signal boosters to trust his diagnosis and prescription, and then for the government folks to take the whole thing seriously. It's not just that he had a general-purpose platform, but that he had credibility in that particular industry.

This strikes me as being essentially pro-social lobbying. Lobbying succeeds in a lot of cases because of things like: talking to the correct people who make the decision; easing the workload by providing a shovel-ready solution (for variants of shovel-ready that include write it this way; asking for specific things which don't obviously harm the mission or reputation of the people they lobby.

Considering the importance of the logistics issue, a natural candidate is to develop one of the other suggestions further. For example, points 3 and 4 (temporary truckyard adjascent to a rail terminal) are kind of a matched set. Off the top of my head:

• identifying suitable truckyard sites, and identifying the owners/managers who would have to give approval
• pre-work on some of the expected objections, like environmental impacts
• some considerations on costs:
  • the point that stuck out to me here was switching how the trains run to short shuttle trips. Trains hate moving empty, because they don't get paid; the simple answer is to pay them; the government probably won't but other parties further back in the chain might be motivated (like the ship owners who want their ships moving; maybe Amazon and Walmart want their new stock; maybe there would be government money available but they cannot do a contract with the rails for weird procurement rule reasons)
• I feel like it might make sense to stand up a company called Emergency Logistics Incorporated or something, where the pitch is connecting the dots such that the ship owners who are hemorrhaging value are willing to pay the trains to get stuff out of the port so they can put more stuff into it. The Western US is scarcely the only place to have this problem; the whole world seems to be having issues like this.

In regards to your fears: “It highlights our general failure to do helpful things, and plausibly blames all our supply chain (and also plausibly all our civilizational) problems on stupid pointless rules and a failure to do obviously correct things.”

Adam Smith may offer some enlightenment on the underlying reasons:

“The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.”

• Adam Smith

As a follow-up to point 8, it looks like the ports are going to start charging money for extended use of their scarce storage capacity: https://polb.com/port-info/news-and-press/san-pedro-bay-ports-announce-new-measure-to-clear-cargo-10-25-2021/

Seems like broadly the right call on an econ 101 level, though the fact that this was ever free is a Chesterton's Fence, $100 seems like a suspiciously round number, and I'm not sure about the differing thresholds for truck-bound vs. rail-bound containers (or thresholds at all, really). 

Maybe someone who knows anything about the shipping industry can comment?

Peterson

Petersen*