Learn about what causes port congestion and the possible solutions
Increased Demurrage, Delays, Disappointment – these are just some of the words that describe what importers and exporters are feeling and dealing with as a result of the port congestion at Los Angeles/Long Beach ports as well as other US West Coast (USWC) ports such as Seattle, Portland and Oakland. What is causing delays in the ports of Los Angeles and Long Beach? In a nut shell: the perfect storm. We’re not talking about the 3 days of much needed rain we recently experienced in Southern California, but rather the combination of the following factors that has lead to the worse port congestion since the port shutdown of 2002. One of the top reporters on the port and labor issues to follow is Bill Mongelluzzo, Senior Editor of the Journal of Commerce (JOC).
CAUSES:
ILWU / PMA labor dispute: disputes over healthcare and other issues between the ILWU and PMA have led to labor shortages and increased inspection of chassis and other equipment which causes delays for truckers getting in and out of the terminals.
Shipping Alliances / Mega Vessels arriving to Los Angeles / Long Beach ports: the mega carrier alliances of G6, 2M, Ocean Three and CKYHE have 10,000+ TEU vessels arriving to the ports and the ports don’t have the infrastructure to accommodate such high capacity to their terminals. There will soon be 24,000 TEU vessels!
Chassis Shortage: Shipping Lines have started divesting from the chassis business prior to peak season in 2014 which means chassis are not provided by the line itself but through chassis leasing companies which has led to dislocation of chassis and chassis imbalances among the terminals.
Increased Cargo Volumes to the ports: imports are up 6% over this time last year. This has also caused many container to be in “closed areas” that are inaccessible for the terminals to pull containers – so if a trucker isn’t ready to pull a container from an open area but a trucker is ready to pull a container from a closed area, this leads to more problems in the ports since truckers waiting in line won’t have a chance of pulling their “closed area” containers but they have caused increased waiting time in the terminals while waiting for their container.
Intermodal Rail Capacity Issues: due to increased cargo at the ports and lack of on-dock rail in all ports, intermodal rail capacity has been strained.
Lack of Truck Power: there are less harbor drayage drivers available to go into the ports. Some drivers have decided not to enter the terminals because they have to deal with chassis splits which cause them more delays.
Dwell Time on Terminals: container dwell time has nearly tripled in the ports from 3 days to 8-9 days. Big importers are granted extended free time in the ports; so they hold their containers in the ports longer, rather than move them into their DC’s (distribution centers) for offloading.
Vessels Anchored Offshore: this is more of a cause and effect of the issues mentioned above – but it is important because it has led to increased delays for containers loaded on vessels that should have berthed at the port on Dec 1st (as an example) but are now berthing on Dec 10th.
SOLUTIONS:
1. There aren’t one or two things that need to happen to resolve the problems, but rather a combination of solutions that address all the issues mentioned above.
2. Many trade groups including the NCBFFA, the National Retail Federation and over 100 other industry associations have sent letters to President Obama, the FMC and congress to intervene and resolve the dispute between the ILWU and the PMA.
3. The terminal operators and their staff are working overtime and weekends to help address the congestion. This has helped, but it isn’t enough.
4. The chassis leasing companies have added many more chassis to their pools and have even formed a neutral or gray chassis pool that will go into effect on February 1, 2015.
5. Routing cargo to other ports until the issues is resolved or ship cargo with Air Freight for urgent/time sensitive cargo. Many importers have resolved to ship their cargo with Air Freight in order to avoid missing deadlines and losing customers and market share.
6. Carriers have been working closer with terminals to improve efficiency within the ports. The terminals need to improve their ability to handle more cargo coming in on larger vessel such as a 14,000 TEU ship as well as their technological capabilities.
7. Greater involvement from the Federal Government to provide a long-term solution to prevent future slowdowns.
Some importers or exporters are wondering which terminal has less congestion in the LA/LB ports. This has to be checked on a weekly basis by us at AEL, please inquire with us for updated information. The same carrier/shipping line may call both ports detailed below, so it is hard to answer the question “Which terminal is best to shipped to for my import containers?” or “Which terminal should I ship out of for my export containers?” because the carrier alliances described above have confused which vessel will call which terminal and those routings are constantly changing.
Some full container importers have started diverting cargo to Houston and railing, or transloading and trucking their cargo to final destination. Some others have diverted cargo to East Coast ports. Some shipping lines, including Evergreen have completely dropped certain services to West Coast ports from Asia.
The slowdowns have affected the LCL import consolidators and (container freight stations) as well, and many consolidators as well as CFS’s are implementing rate increasing such as PCS (port congestion surcharge), Port Drayage Surcharge, and other surcharges to cover the increased expense to pull containers from the ports to their CFS’s. Some consolidators are diverting cargo to Houston, and then railing them up to Los Angeles.
When Will This Congestion End?
The most important question for importers and exporters is: “When will this congestion end?” Depending on whom you ask, port congestion is here to stay and may lead to a permanent loss of cargo to Los Angeles and Long Beach ports. While it is hard to believe cargo will move to other ports because of the strategic location of distribution centers, transit time and cost to ship to Los Angeles and Long Beach, it is certainly a consideration many big importers are considering and setting up contingency plans for. Be prepared for contingency plans and send us an, for additional information and consultancy on logistics solutions to meet your needs.
Some additional information on the ports of Los Angeles and Long Beach:
Some Terminals in LA/LB require appointments. These terminals are:
WBCT, TTI, Evergreen, APM terminal, and APL
Some ask whether it is a good thing or a bad thing to ship to a Terminal that requires appointments:
The advantage of shipping to a terminal that requires appointments is you have less truckers going to that terminal since there are set times for those containers. The disadvantage of shipping to a terminal that requires appointments is many truckers will make appointments and not make their appointment, which is a time slot that another trucker could have made and picked up a container under. The issue of closed areas and open areas in terminals depends on the terminal, and it includes both types of terminals, those requiring appointments and those that do not.
Port of Los Angeles (POLA)
There are 9 Container Terminals in Los Angeles seaport. The rest are bulk and cruise ship terminals. The Map of Los Angeles port Terminals shows a bird’s eye view so you can better understand the layout of this port.
Terminals include: West Basin Container Terminal (WBCT), Trans Pacific Container Service Corp. (TraPac), Port of LA Container Terminal, Yusen Container Terminal (YTI), Evergreen Container Terminal, (Global Gateway South (GGS) operated by Eagle Marine Services, Ltd., APM Terminals, and California United Terminals (CUT).
Shipping Lines or Steamship Lines that call this port include: China Shipping, Yang Ming, United Arab Shipping, CMA/CGM, K-Line, Cosco, Hanjin, Zim, Mitsui O.S.K. (MOL), APL, Hyundai Merchant Marine Co., Hapag-Lloyd, OOCL, NYK, Evergreen, Hatsu Marine Ltd., Italia Marittima S.P.A., Hanjin, Maersk, Horizon Lines, and MSC.
Port of Long Beach (POLB)
There are 6 Container Terminals in Long Beach seaport. The rest are dry bulk, liquid bulk, break bulk and RORO terminals. The Map of Long Beach port Terminals shows a bird’s eye view so you can better understand the layout of this port.
Terminals include: Total Terminals International LLC (TTI) Pier T, International Transportation Service, Inc. (ITS) Pier G, Long Beach Container Terminal Inc. (LBCT) Pier F, Pacific Container Terminal (PCT) Pier J, and SSA Marine (SSA) Pier A, SSA Marine (SSA) Pier C.
Shipping Lines or Steamship Lines that call this port include: MSC, ANL, CMA/CGM, Zim, Matson, Hapag-Lloyd, NYK, OOCL, APL, Cosco, Evergreen, Hanjin, Hyundai Merchant Marine, K-Line, Mitsui O.S.K. (MOL), Yang Ming, PIL, Wan Hai, and Maersk.
Contact us today at (800) 874-4748 or request a quote.