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FMC told port congestion getting worse

Speakers blame big ships, carrier exit from chassis business as contributing to port snarls.

   While there was agreement at a forum in Los Angeles sponsored by the Federal Maritime Commission that U.S. ports are suffering from congestion, views on how to solve the problem varied.
   FMC Chairman Mario Cordero chaired the session, which was held at the Port of Los Angeles headquarters, and several times he noted congestion issue was not unique to the Ports of Los Angeles and Long Beach, which together handle about 40 percent of the nation’s containers. The FMC has said it will hold similar meetings to learn about port congestion in other parts of the country. Meetings are planned in Baltimore, Charleston and New Orleans.
   Michele Grubbs, vice president of the Pacific Merchant Shipping Association, which represents marine terminal operator and ocean carriers servicing international trade through West Coast ports, cited several factors contributing to congestion. These include larger ships discharging massive amounts of cargo in a short period of time; new and larger vessel-sharing agreements by carriers; the decision by many steamship lines to no longer own or supply chassis, which has led to a shortage of chassis in Southern California; the random nature of delivery and pick up of cargo by draymen; and terminal activity that goes through peaks and valleys at various hours.
   “It is worth noting that taken alone, each of these factors have evolved in response to demands for increased efficiency, flexibility in service and to cut costs for customers. But each of these and more have also been cited as leading to congestion, increased costs and frustration at terminals,” she added.
   Bob Wysocki, a division vice president at Sears Holdings, said that it is taking his company “one to two weeks to get on a train, and once you are on a train, two weeks from there. This is our Super Bowl month for Sears Holding. This is out fourth quarter right now. Merchandise is not getting to our stores. … We all need to figure out how to do this better.”
   Robert Curry, the chief executive officer of the drayage firm California Cartage, said, “Congestion is really bad, and the turn times we are getting are really bad also.” He said that two or four years ago, his drivers did twice as many turns at container terminals than they do today. He said turn times can be as long as seven hours, measured from the time a trucker driver joins a queue until when they leave.
   “Drivers don’t like it, even if they are paid stand-by time,” he said.
   He noted that trucking companies are regulated on the number of hours drivers can work in a day as well as in an eight-day period, and that “many times we have to shut down the drivers — sometimes as many as 50 or 60 — because they exceed the hours, and there are still many containers down at the harbor to pick up.”
He agreed that large ships and lack of chassis were contributing to congestion.
   “The steamship lines arbitrarily decided last year to get out of the chassis business, so now we have three chassis lessors, and we can go into a terminal today and there are no chassis for a particular steamship lines cargo, yet there are 200 chassis there that belong to another steamship line, and we can’t use them,” he said.  
   Curry said that his company often has to dispatch a driver to pick up chassis at one terminal to bring it to another terminal, eating up a driver’s hours.
   Bernard Vaughan, executive vice president of Flex-Van, said it can cost his company the equivalent of four to five days of revenue to move a bare chassis from one terminal to another.
   Curry also said because there is a scarcity of land near ports, big box stores are locating their facilities in places such as Riverside or “20 miles beyond Riverside. Drivers, if we are lucky, can make one turn.”
   Alex Cherin, executive director of the Harbor Trucking Association, said a study by his group last year found 22 percent of all visits to terminals are taking more than two hours.
   HTA advocates looking at how to better integrate technology into moving containers in and out of terminals, and that the port look at a “24-7 system to provide a relief valve to some of the congestion.”
   PierPass — the system created by terminal operators to provide incentives to shippers to move more containers at night — has been a “very good first step,” said Jon Slangerup, chief executive officer of the Port of Long Beach. While 55 percent of containers now move at night, easing road congestion during the day, he said “there has to be a PierPass 2.0” that should apply information technology more effectively.
   Cherin said the Port of Vancouver, B.C., has changed its tariff to penalize terminals that do not meet a 90-minute turn time, and that incentives should be provided to carriers.
   Grubbs said creation of gray chassis pools could help ensure availability of an adequate supply of chassis, ease the burden for terminal operators in having to provide dock space for multiple chassis pools, and reduce downtime for truckers.
   Vaughan said congestion issues are common to all ports, but “probably the worst” in Los Angeles and Long Beach. He said the decision by most carriers to sell their chassis fleets occurred much more quickly than was anticipated and that today Flexi-Van, TRAC and Direct ChassisLink,  Inc., now own 80 percent of chassis.
   Flexi-Van contributes about 18,000 chassis to the 38,000-chassis Los Angeles Basin Pool, which also counts TRAC and China Shipping as members, but that the pool is not profitable.
   Vaughan said Flexi-Van spends about $40 million a year on chassis maintenance, but has a lack of control over repairs and in preventing drivers without insurance from using its chassis. He also said it is difficult to obtain good mechanics for a chassis maintenance and repair.
   He also said terminals are now considering charging for storage of chassis on terminals.
    Vaughan said that the LA Basin Pool and DCLI (which is also the program manager for the GACP, the pool for members of the G6 Alliance) are planning to cooperate and have common points for the drop-off and pick-up of chassis. He said he expects to receive a favorable business review letter from the U.S. Department of Justice this week allowing this plan to move forward, which they hope to implement early next year.
   William J. Shea Jr., the CEO of DCLI, said the plan is to eventually have the LA Basin Pool, DCLI, the GACP and the West Coast Chassis Pool WWCP
   Grubbs expressed that handling large blocks of cargo all bound for a single consignee under a program called “Free-Flow” PierPass could result in faster movement of containers from terminals by truckers. PierPass announced a test of the Free Flow program last week.
   Rich Dines, a commissioner at the Port of Long Beach who works as an ILWU marine clerk, said the Free Flow is similar to the method used to move containers going to trains at the port.
   “We need to focus on reducing costs for port customers, and not increasing them,” said Dines. He said the PierPass fee charged shippers to help subsidize night operations at the ports was making the two ports less competitive.
   “Today the $133 PierPass fee causes many customers to bypass our ports and explore more cost effective options. In my opinion, we are chasing cargo away and this fee is no longer sustainable,” said Dines.
   He proposed compensating terminal operators for night shifts with a transaction fee of $10-$20 on all container movements rather than with the traffic mitigation fee.
  Dines said, “As a starting point we should target the current level of revenue collected by PierPass for reimbursement to terminal operators. I am not trying to take money away from terminal operators with this idea; it would be a starting point. They need to be compensated for their additional cost.”
   Ed DeNike, president of SSA Containers, the largest container terminal employer on the West Coast, said terminals are paid by steamship lines for operating one shift from 8 a.m. to 5 p.m. and “other than that, we don’t get paid for it.”
   He said, “PierPass has done a great job for us, and I think they have done a great job for the other operators.” The Ports of Long Beach and Los Angeles are the only ports at which his company operates at night, “and it saved us. Without having a night operation, we could not survive.”
  DeNike said it was “a misconception that terminal operators don’t care about truckers,” noting SSA has a sizeable drayage operation of its own.
   “We also see what it takes and how hard these guys work, and it’s difficult for them to make a decent living,” he added. “On the other hand, we are not sure what to do about it.”
  DeNike said terminal operators faced two major problems including chassis shortages. He said that morning he had told one of his company’s biggest customers “we could not handle their ships any longer at one of our larger terminals here because they can’t supply chassis.”
  He continued, “We are working two gangs on ships when we should be working six or seven gangs because we have nowhere to discharge the containers.” He said SSA has thousands of containers stockpiled outside transtainer delivery rows “because we don’t have chassis to deliver them. This is not our fault.”
  He said his company has had to hire guards at “chassis pits” where truckers wait for chassis that are coming in because when chassis come in for a certain line truckers “will fight for that chassis because they have been working there sometimes for hours …. The guard has to determine who was there first.”
  He added, “I can tell you this, in Southern California specifically, if there was the required amount of chassis, this problem, much of it would go away.”
  DeNike said there needs to be a more even flow of traffic over the course of a day, saying that terminals are empty from 8-10 a.m. “We can’t man up labor for spurts during the day, we have to have even flows throughout the day to make sense financially,” he said.
   DeNike said he did not believe 24 hour-7 day operations make sense, saying “we can’t operate two shifts. Today we are open two shifts, we are maybe working a shift and a quarter” because traffic is uneven during the day.

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.