by Scott Weiss, Port Logistics Group
Timely pick-up of your imported product at the Ports can sometimes be the difference between meeting your customer's designated arrival date or receiving a deduction from your invoice for a late shipment.
Now more than ever, a range of new pressures and forces have been at work at ports, so here are seven existing issues that you need to really know about:
1) Contract Negotiations – Nearly 20,000 dockworkers at 29 West Coast ports are now loading and unloading cargo containers from Asia and elsewhere without a contract. A six-year agreement with employers expired on July 1, 2014. Negotiations are still ongoing for a new deal. Fearful that a breakdown in talks could shut down West Coast ports, retailers rushed goods into the country before the contract expired, not wanting to be left empty-handed during the busy back-to-school and holiday seasons.
2) Mega Alliance Agreements – For decades, big ocean carriers have shared ships through vessel-sharing agreements. It's all about lowering costs by sharing the space on huge ships that none of the lines could fill on their own. These agreements are similar to the arrangements some airlines have with one another, enabling them to share seats and keep their planes full. Historically, these agreements were small, affecting fewer than 100 slots on vessels that carry thousands of containers. Today, the agreements are huge as these giant alliances provide carriers a way to afford the costs of operating mega ships.
3) Mega Ships – "Mega Alliances" formed by the largest ocean carriers are lead them to put mega ships into service on the busiest trade lanes. These vessels are big enough to carry 18,000 20-foot equivalent unit containers (TEU's) – that's three times the capacity of the biggest ships only two decades ago. It's been 25 years since the biggest became too wide for the Panama Canal. These first "post-Panamax" ships, carrying 4,300 TEU, had roughly a quarter of the capacity of the current record holder, the 16,020 TEU Marco Polo. When a single mega ship calls at a terminal and generates the same volume that used to be carried by two vessels half that size calling at two different terminals, the mega-ship creates such a surge in cargo volume in a short period of time that the container yard and gates become congested.
4) Chassis Shortage – Shipping lines provided a chassis with every container ever since the first containers arrived into U.S. Ports in the 1960's. Within the past few years though, shipping lines in the U.S. have sold most of their chassis to equipment leasing companies and chassis pool operators. Now that the lines have sold most of their chassis, they no longer control the equipment. Truckers must go where the chassis were dropped off, which could be a completely different terminal from where the trucker just called. Therefore, a huge chassis dislocation issue has emerged, where one terminal may have few chassis on a particular day and another terminal may have thousands of chassis. Drivers must wait in line for a container to be "flipped" from one conveyance to another, resulting in long turn times. In fact, the biggest complaint by port truckers today is not the long truck lines at the terminal gates, but rather the conditions within the container yards due to heavy flip congestion.
5) Hours of Operation/Turn Times – In July 2013, a new Hours of Service rule went into effect. Key revisions included:
- Limiting the maximum work week for truck drivers to an 11 hour daily driving limit and 14 hour work day limit.
- Limiting the maximum work week for truck drivers to 70 hours, a decrease from the previous maximum of 82 hours.
- Requiring truck drivers to take a 30 minute break during the first eight hours of a shift.
An internal trucking report in Los Angeles/Long Beach revealed that some drivers were experiencing turn-times of 3.5 to 5 hours at seven of the terminals in the harbor, with the remaining terminals having turn-times of 2.5 hours or less. At least 50% of imported product arriving into ports is moved by truck to distribution centers within 100 miles of the ports. In general, port drivers get paid by the load so the new Hours of Service rules combined with increased waiting time at the terminals means lower productivity.
6) Clean Trucks – Several years ago, the Ports of Los Angeles/Long Beach mandated that all trucks picking up containers at the port be retrofitted in order to reduce carbon emissions and pollution. Investing in a new clean truck costs upward of $130,000 and led thousands of drayage carriers to exit the industry thereby severely decreasing port drayage capacity.
7) Rail Capacity – Almost every terminal in Los Angeles/Long Beach now has on-dock rail capability and the use of on-dock rail continues to increase. Containers that can't leave the terminals by rail on schedule are backing up, contributing further to congestion in the terminal yards.
Merchandise suppliers should be aware of these issues and put action plans in place to ensure their shipments arrive at their appointed destinations timely.
As Vice President, Business Development, Scott Weiss works closely with apparel, footwear, and housewares manufacturers of all sizes to ensure compliance with retailer routing guide requirements. Port Logistics Group is a market leader in gateway port logistics services, operating over 5 million square feet of warehouse space. Services include port drayage, import deconsolidation, warehousing and distribution, retail compliance, local transportation, and store delivery in key port locations of Los Angeles/Long Beach, New York/New Jersey, Seattle, and Savannah. Scott may be reached at email@example.com or (562) 977-7620.
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