Texas Gov. Greg Abbott thinks the delays at the nation’s largest ports in Southern California is an opportunity for Texas to capture more business.
Or at least he might want his state’s voters to think so, even if he doesn’t believe it.
His campaign has put out a video which wrongly claims the way for cargo to get around delays in Southern California is to sail to ports in Texas instead.
“Are your products stuck off Long Beach? Texas ports are wide open,” says the video, which Abbott tweeted to his followers on Monday. “Port delays are up to 100 days in California. In less than two weeks your cargo can set sail from California and be at one of our 24/7 functioning Texas cargo ports, unloaded and on their way to shelves near you. Choose a state that doesn’t see inflation and America’s supply chain backlog as a good thing. Escape California. Everyone’s doing it. Choose Texas.”
It’s true there has been a steady flow of both individuals and business from California to Texas in recent years. Most notably Tesla (TSLA) announced a month ago it is moving its headquarters from Silicon Valley to near Austin. HP Enterprises, a descendant of the company that helped give birth to Silicon Valley as the nation’s premier tech corridor, and software and cloud services giant Oracle (ORCL), both announced they, too, are moving to the Texas state capital in December. There are good reasons, including lower taxes and real estate prices, those moves make sense for companies and individuals.
But when it comes to containers of cargo, not so much.
There are many problems and inaccuracies with the governor’s video, not the least of which is port delays are nowhere near 100 days in California. Earlier this fall they were averaging about 10 days. Now the delays to get into ports has dropped to seven to eight days, according to data from Spire Global, a data analytics firm that provides global vessel tracking data.
And no, it doesn’t take “less than two weeks” of extra sailing time from Asia to Texas compared to the time it takes to sail from Asia to Los Angeles or neighboring Long Beach. Shanghai to Houston would be 37 days on average, according to data from Spire. Shanghai to Los Angeles or Long Beach would be only 20 days.
Many of the largest container ships are actually too big to sail through the Panama Canal and couldn’t possibly make the trip that fast. In fact, many of the ships that bring Asian cargo to Texas are going the other way around the world, and making stops in Europe before reaching Houston.
Even with the port delays, it’s faster to put a container unloaded in Los Angeles or Long Beach on a rail car and send it anywhere in the country, including Texas, than it is to sail all the way to a Gulf Coast or East Coast port. That’s why the West Coast ports handle the lion’s share of Asian imports.
“No other port in the Western Hemisphere has the infrastructure, labor force, rail network and warehousing to match the [container volume] that will move through the [Southern California ports] complex this year,” said a statement from the Port of Los Angeles when asked about the Abbott’s video.
Abbott’s campaign, and his administration, did not respond to requests for comment from CNN Business about the video and its claims. The fact the video was made by his campaign and posted on Abbott’s personal Twitter feed, and not the state’s economic development agency or the Port of Houston, the only major container port in the state, suggests it was aimed more at voters than at actually attracting business. Abbott is running for reelection in 2022.
To be sure, Houston has seen an increase in container traffic this year, and so have all US ports. The reason is the pandemic-related seismic shift in spending by US consumers, away from services such as eating out, travel or going out to movies or sporting events, and more on actual goods, which need to be moved. Even domestically made goods, such as cars or appliances, rely on parts that must be imported through the US ports.
So that’s why there are delays outside of Los Angeles and Long Beach, which between them handle about 40% of containers carrying goods into the United States.
“The port complex will handle all-time record volumes amid the unprecedented surge in imports driven by the American consumer,” said the statement from the Port of Los Angeles. “The supply chain challenges being faced around the world are largely a result of new levels of global demand.”
While Houston is seeing more cargo volume it has not seen any ships diverted from Southern California, said Lisa Ashley, spokesperson for the Port of Houston.
Houston is the nation’s 6th largest container port. But in 2020 it handled at equivalent of 2.9 million 20-foot containers of cargo, which is how volumes are measured. That’s a fraction of the 9.2 million handled by Los Angeles alone, plus another 8.1 million at Long Beach.
Houston’s primary business is bulk products, primarily oil and gas. But it does handle 70% of the container traffic along the Gulf Coast, and virtually all the containers at Texas ports. In the unlikely event a Los Angeles-bound container ship was diverted to Texas, that’s where it would go.