November News / Port Congestion Update (Cont.)

Posted November 7, 2014
Category Company News

As the West Coast Ports Turn…

Like sands through the hour glass, the west coast port congestion continues to linger and in many respects worsen. Importers and exporters nationwide fear the potential for crippling gridlock is upon us as the trade industry enters the peak holiday shipping season.

Vessels waiting at anchor in Los Angeles and Long Beach paints a not too rosy picture for Southern California ports while work slow downs at Seattle / Tacoma ports has resulted in terminal operators opting to send labor home after only two hours on the clock. An unusually low crane productivity level of 40 – 60% resulted in a BNSF decision to halt intermodal rail service from some interior locations to the ports. PMA cited terminals that typically move 25 – 35 containers per hour as moving only 10 – 18 containers per hour.

Those presently moving cargo through the ports of Seattle / Tacoma cite numerous struggles including the inability to procure equipment, return empty containers, or return loaded export containers to the terminals. Adding insult to injury, importers and exporters bear the financial brunt of the port congestion as they are often forced to pay added costs assessed from a combination of players. Ocean carriers and port terminal operators continue to assess demurrage and per diem fees even though returning the equipment is not possible while inland carriers who often forced to hold containers they are unable to return levy additional drayage and storage fees.

Seattle / Tacoma terminal operators point to the ILWU’s decision earlier this week to only dispatch ‘certified’ transtainer operators as proof of ILWU’s intent to slow down operations. Dozens of longshoremen deemed ‘qualified’ have long provided such services but are no longer being dispatched as the ILWU cites a lack of formal training.

The ILWU and PMA each issued press releases earlier this week pointing the finger at the other for labor, productivity, and congestion problems. With much remaining to be sorted out one thing is crystal clear; both parties must return to the bargaining table with a renewed conviction to reach an amicable solution.

For the most recent PMA press release, http://www.pmanet.org/wp-content/uploads/2014/11/PMA-News-Release-Pacific-Northwest-Slowdowns-110314.pdf

For the most recent ILWU press release, http://www.longshoreshippingnews.com/2014/11/dishonest-media-offensive-by-pma-jeopardizes-contract-negotiations-and-deflects-from-a-growing-congestion-problem/

Industry Reactions

The port congestion has forced many west coast inland carriers to levy ‘congestion’ surcharges between $50 – $100 usd per hour to accommodate for long wait times being experienced with the fee effective after one hour of idle time is experienced.

Traditionally, drivers are not compensated for port wait times as the pickup and delivery of equipment was considered to be part of the inland haulage agreement. Given the long wait times presently being experienced at the ports drivers simply can’t make the same number of daily trips they once could. Sadly, this forces driver’s to charge a congestion fee simply to ensure a minimum level of income and profitability required to operate is reached.

This situation is not unique to the west coast ports. Inland carriers in other ports have also assessed such fees with truckers in the New York / New Jersey area instituting such charges earlier this year as a result of cold weather and long terminal delays. Importers and exporters footed the bill then for the additional fees citing the need to keep their cargo moving and there’s no reason to believe they won’t foot the bill now…

Port Congestion ~ What’s really to blame?

Earlier this week, the Journal of Commerce cited 12 reasons for Los Angeles – Long Beach, CA port congestion. Following is a quick summary of their take on the situation.

1. Big Ships – Bigger ships mean more containers, longer port calls and stressed terminal operations
2. Bigger Cargo Volumes – The ports are recognizing a 5% increased in cargo volumes compared to 2013.
3. Carrier Alliances – Alliance carriers use multiple terminals causing challenges for inland carriers to match chassis and container needs.
4. Chassis Shortages – Allocating chassis to meet terminal needs is proving most difficult with chassis operators recently agreeing to develop a chassis pool model.
5. Gate Hours – Increased gate hours and continuous operations are needed.
6. Labor Staffing – Employer costs per man hour have increased by 20% while cargo volume has only increased by 5%.
7. Safety Checks – Additional ILWU safety checks of equipment are resulting in increased turn times.
8. Hard-Timing TraPac – Automating operations, TraPac refuses to accept ILWU staffing requirements deemed unnecessary resulting in low productivity.
9. Truck Capacity – Hours of Service restrictions and terminal congestion is stressing truck capacity with many drivers seeking other opportunities.
10. Vessel Bunching – Larger ships take longer to turn around as terminal operators struggle to find the right balance between shipside vs yard labor.
11. Demurrage & Per Diem – Port terminals are refusing to accept empty containers and reducing storage time resulting in equipment late fees and added congestion.
12. Port Non-Productivity – U.S. terminal operators lag counterparts in Europe and Asia in handling larger TEU count vessels.
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Family News

November Birthday’s
Please join us in wishing the following family member(s) a Happy Birthday:
November 13 – Heather Cortez
November 25 – Beth Raymond

November Anniversaries
Please join us in wishing the following family member(s) a Happy Anniversary:
November 20 – Bill Yennie – 7 Years!

November Holidays
November 01 – All Saints Day
November 11 – Veteran’s Day
November 27 – Thanksgiving Day Holiday (Office Closed)
November 28 – Black Friday (Office Closed)

My cooking is so bad my kids thought Thanksgiving was to commemorate Pearl Harbor.
Phyllis Diller

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