West Coast Ports Update

Transcription

1 West Coast Ports Update Dear Valued Customer, As the West Coast Port congestion issues continue to worsen, we want to keep you at the front of our minds. In addition to LA/LB, the Pacific Northwest (SEA/TAC) is now struggling. It appears the ILWU labor is creating delays by not filling labor orders. The situation in LA/LB has dominoed and ships are now arriving from Asia and anchoring in the harbor until a berth opens. This will cause a one to two day additional delay to the seven to 12 day delays we have been experiencing. At this point, the Ports of Vancouver and Prince Rupert in Canada are in fair shape. Please keep in mind the following as you go about planning: If importing cargo via the ports of Los Angeles and Long Beach, please expect between seven to 12 days of delays to the published transit time schedule. Exporting cargo through the West Coast is also becoming problematic if export cargo is moving from an inland point in the US. This is due to the imbalance of rail cars moving east, lack of available car space at inland points and the inability of the railroads to quickly and efficiently move loaded import trains from West Coast marine terminals and rail depots to inland points. Please contact your local Crane Worldwide Logistics representative and ask us about solutions including moving cargo via US domestic ground service and transloading in California or Washington to an ocean container for exporting. Due to the prolonged, continuous congestion the West Coast ports have experienced over the past several months, we expect there will be several months of continued delays in getting back to normal operations while the marine terminals, Class 1 railroads, chassis operators and truckers clear the backlog of freight. We should begin to see moderate levels of improvement in early 2015 as volumes slow. Please contact your local Crane Worldwide Logistics representative and ask us about all-water services via alternate ports or sea & air combination solutions. These options can be particularly effective if cargo is time sensitive. Sincerely, Tim Zubradt Executive Vice President of Sales and Marketing

2 Bill Mongelluzzo Twelve Reasons for LA-LB Port Congestion Solution: There will be a dip in volumes into December because all of the holiday merchandise has entered the country, but there will be another spike in January before the Chinese New Year. The entire supply chain must gear up for bigger volumes. This may necessitate the hiring and training of additional longshore labor and truckers. 1. Big Ships Impact: The largest ships in the U.S. trades are calling in Southern California. Each vessel call generates 5,000 to more than 10,000 container moves during the several days a ship is in port, stressing berth, yard and gate operations. Solution: The big ships are here to stay. In fact, the vessels will keep getting bigger, so terminal operators must improve their productivity to handle the big ships. 3. Carrier Alliances Impact: Alliance partners are spreading out their vessel calls over multiple terminals in Los Angeles-Long Beach as many as five or six creating a logistical nightmare for truckers and cargo interests attempting to match the right chassis with the right containers. Solution: Carrier alliances are not going away, so the alliance partners must work closer together, beginning with the stowage of containers on vessels overseas. Alliance carriers must cooperate with each other, and with terminals in Los Angeles-Long Beach, in planning which terminals will handle vessels when they arrive in port. 2. Bigger Cargo Volumes Impact: Cargo volumes at the port complex through September are running 5 percent higher than the same ninemonth period in 2013, despite a good deal of cargo diversion to other ports, and this unexpected growth is taxing the entire supply chain. 2

3 gate at 7 a.m. each morning, an evening flex gate from 5 p.m. to 6 p.m. and were adding staff to keep their gates open through the day lunch hour and evening dinner hour. 4. Chassis Shortages Impact: Chassis are scattered all over the harbor, in excess at some terminals and in deficit at others, making it extremely difficult for truckers to have the right chassis when the drivers need them to match with the containers that must be moved. Solution: Operators of the largest chassis pools in the harbor have agreed to develop a gray chassis model, with rollout promised for Feb. 1, Interoperability of chassis assets is crucial to resolving the equipment problem. 6. Labor Staffing Impact: Congested marine terminals generate hundreds of extra container moves in the yards. Numbers posted on the Pacific Maritime Association website indicate employers are paying 20 percent more man-hours compared to last year even though cargo volumes in Los Angeles-Long Beach are up only 5 percent. Solution: Extending gate hours, moving forward with the gray chassis concept and improving terminal productivity should eventually de-congest the terminals and reduce unnecessary container moves within the harbor. 5. Gate Hours Impact: Even though terminal operators in Los Angeles-Long Beach keep their gates open up to 10 shifts each week, long truck lines at the beginning of each shift and after lunch breaks indicate that continuous operations over 16 to 18 hours each day are necessary to prevent truck bunching. Solution: PierPass Inc. announced on Oct. 24 that most of the 13 terminals in the harbor were running an early flex 3

4 sets a precedent for future automation on the West Coast. Once again, a coastwide labor contract will reinstitute the grievance machinery, and TraPac and the ILWU can seek arbitration to resolve the matter peacefully. 7. Safety Checks Impact: The California Trucking Association this fall reported that ILWU mechanics, possibly in line with coastwide contract negotiations, launched a new policy of secondary safety checks on tractors, chassis and containers, causing unacceptably long turn times for truckers. Solution: The Pacific Maritime Association and International Longshore and Warehouse Union must immediately come to agreement upon a new contract. The contract s grievance machinery will then be in effect, and employers can seek timely arbitration when there is cause to believe frivolous safety checks are being required. 9. Truck Capacity Impact: Federal hours of service restrictions and severe terminal congestion have stressed truck capacity in the harbor beyond its breaking point. Drayage companies are turning down pleas from importers to take on new business because the motor carriers don t have enough capacity to handle their existing book of business. Solution: The Harbor Trucking Association says there would be sufficient truck capacity if the terminals weren t so congested. As an interim solution, a request to the government to temporarily extend the hours drivers can work might offer some measure of relief. Improved turn times at the terminals are crucial to attract more drivers to the harbor Hard-Timing TraPac Impact: TraPac, which will be the first terminal in the harbor to automate its operations, is resisting attempts by the ILWU to force the employer to accept manning requirements TraPac says are unnecessary. Productivity at the terminal is way down. Solution: This is a war of attrition to see which side wins and

5 tion problem is resolved, the ports and terminals should extend free time for equipment, but others say this policy would result in making congestion worse by reducing the sense of urgency for removing containers from the terminals. 10. Vessel Bunching Impact: Big ships are being delayed at major gateways around the world because they take longer to be worked. When they reach Los Angeles-Long Beach, the terminals are assigning only two or three work gangs alongside the ships, rather than five or six, and are using most of the workforce to decongest the yards, further delaying the vessels. Solution: Terminal operators around the world must develop processes to turn the big vessels in a timely fashion so the ships can be kept on schedule. 12. Port Non-Productivity Impact: Shipping company executives have stated, and The JOC Group Port Productivity database numbers confirm, that U.S. terminals lag their counterparts in Asia and Europe in working today s mega-ships, so the problems being experienced in Los Angeles-Long Beach today could easily spread to other U.S. ports in the near future. Solution: Terminal operators must analyze existing work practices and work rules, borrowing best practices from world-class ports in Asia and Europe, to prepare U.S. ports for the eventual arrival of vessels with capacities up to 18, foot container units. 11. Demurrage and Per Diem Impact: Marine terminals without prior notice are refusing to accept empty equipment, they are restricting the time for storing export loads, and they are closing sections of their facilities to truck traffic. This is causing a surge in late charges for the return of containers and chassis, and processing the paperwork that is involved is adding to the congestion problem. Solution: Some industry sources say that until the conges- 5

6 LA-LB Truckers Impose Surcharges, and Shippers Are Paying Bill Mongelluzzo Port congestion has gotten so bad in Los Angeles-Long Beach that harbor truckers are imposing congestion surcharges of $50 to as much as $100 an hour, and retailers and other beneficial cargo owners are paying the extra charges if the alternative is that they will not get their containers that day. Truckers say they have no choice but to charge customers for long waits caused by port congestion. Truckers lose thousands of dollars a week because trucks that sit idle in long lines outside terminals are not available to pull other loads. Drivers who normally would make four trips per day are averaging fewer than two because of the widespread congestion, trucking company executives said. During past bouts with port congestion, trucking companies attempted to charge BCOs for long wait times, but they weren t successful. Those times are changing, said Fred Johring, president of Golden State Express and chairman of the Harbor Trucking Association of Southern California. Many importers will willingly pay wait times or surcharges if that is what it takes to get their containers, he said. Many trucking companies in the past would attempt to collect a surcharge after drivers spent two hours in line, but some companies are now seeking a surcharge after one hour, Johring said. He outlined a typical scenario. When a driver has spent an hour or longer waiting in line at a marine terminal, the company will contact the cargo interest and present the importer with two options: either agree to pay a specified surcharge for the driver to remain in line, or decline to pay the surcharge and the trucker will leave that terminal and go after another load. that every week they receive several requests from potential new customers, but the drayage companies say they are struggling to meet the requirements of their steady customers, so they must turn down the new business. Exporters in Southern California are facing a different challenge. Recently, some carriers have been notifying exporters that the terminals are running out of space, and those terminals are limiting the number of days that they will accept export loads to four days, or in some cases fewer. The ports tariffs allow export containers to be delivered to the terminals up to six days before the cut-off date without being charged storage. The Port of Los Angeles created a storm last month when it solicited shipper reaction to a proposal to reduce free time on exports to four days from six days. Peter Friedmann, executive director of the Agriculture Transportation Coalition, said the proposal drew an immediate response from his members. They are angry, he said. One ag shipper stated that port congestion in Southern California is caused by the processing of imports, not exports. Don t penalize exporters for operators not being able to control their import traffic, the shipper said. Some exporters ship 100 or more containers on a single voyage. Their access to truck capacity requires that they spread out their shipments over five or six days, another ag shipper said. A spokesman at the Port of Los Angeles said the port has no current plans to change free time. A spokesman in Long Beach said that port has no plans to change free time for exports. This situation is not unique to Los Angeles-Long Beach. Truckers in New York-New Jersey levied surcharges earlier this year when the frigid winter weather caused long delays at terminals there. JOC.com reported in a Feb. 21, 2014, story that some truckers were charging $60 an hour after a three-hour wait at the terminals. However, Long Beach had extended free time for imports to seven days from four days for the period Oct. 18 to Oct. 31. Importers had hoped the port would push the free-time extension into November because cargo volumes remain strong, but the port spokesman said Thursday the extension would end Oct. 31 as planned. Port congestion has also had the effect of reducing truck capacity in Southern California. Trucking companies report 6

7 Please note that, as of this morning T-18 in Seattle has closed their gates for all transactions due to labor shortages. It is rumored that WUT in Tacoma will follow suit shortly. Pierce County Terminal in Tacoma has stopped receiving for exports due to the terminal being at capacity. Port Situation in Seattle/Tacoma T46 is not receiving exports at this time, either. This is a very fluid and volatile situation, and is changing by the hour. As we receive more useful information, we will do our best to keep you updated. Labor Slowdowns Cause Cargo Backlogs in Seattle, Tacoma Ports Bill Mongelluzzo Cargo backlogs at the ports of Seattle and Tacoma are mounting due to work slowdowns by the International Longshore and Warehouse Union, threatening vessel arrivals scheduled for the weekend. The work slowdowns, which employers say are tied to contract negotiations between the ILWU and the Pacific Maritime Association, began last Friday, intensified over the weekend and continued through Wednesday. Terminal operators say they have not been able to adequately work vessels since last week. Port of Tacoma spokeswoman Tara Mattina said the container vessels in port on Wednesday began arriving last weekend, and several more container ships are scheduled to arrive this weekend. The ships are beginning to stack up, she said. The ILWU work slowdowns are causing extreme losses for harbor truckers who report gate moves have been reduced to a trickle. Jim Dutton, vice president of the Washington Trucking Association, said member companies send their trucks to the harbor each morning, a few lucky truckers are able to complete transactions, and the others are escorted out of the terminals and the gates are closed. BNSF Railway confirmed on Tuesday that it was embargoing intermodal rail services from certain locations in the Midwest to the Pacific Northwest ports. If the trains get stuck there, they will not be available to serve customers in other locations, the railroad said. PMA on Monday issued a statement accusing the ILWU of work slowdowns and refusing to dispatch skilled labor to handle cargo-handling equipment requiring certified operators. In Tacoma, the ILWU is not filling orders for skilled workers, including straddle carrier operators, who are crucial to terminal operations, PMA spokesman Wade Gates said. This is like sending out a football team without the receivers or running backs. You can t run the plays without them, he said. PMA said the longshoremen who are reporting to work each day in Seattle and Tacoma have reduced container-handling productivity by 40 to 60 percent. The daily routine at the terminals this week has been for longshoremen to show up at the terminal for a work shift and operate slowly for about two hours. The employers then dismiss the workers and shut down the facilities until the next shift. A bulletin that a shipping line sent at 1 p.m. Wednesday to its customers and vendors is representative of what cargo interests are used to receiving now: The terminal has shut down for the rest of the day. Labor has been released. They will be ordering labor and trying again tomorrow. The Port of Seattle Wednesday issued a brief statement: Labor negotiations are affecting operations at our terminals. The situation remains dynamic at this time. We urge shippers to check with their shipping line and terminal operator for current status. The Port of Seattle hopes for a speedy resolution of the PMA/ILWU negotiations so that terminals can resume full operation and movement of goods. Several vessel arrivals are scheduled this weekend, although terminals must complete the work on the ships that are already there in order to receive additional vessels. On a positive note, Mattina said a car carrier that arrived on Wednesday in Tacoma was being worked all day, albeit slower than we would like. Vessel operators do not have many options on the West Coast. Los Angeles-Long Beach has been crushed by congestion for weeks now. The Canadian ports of Prince Rupert and Vancouver are options, but are already grappling with overflow cargo from the U.S. ports. The ILWU also engaged in slow-down tactics and excessive safety checks in Los Angeles-Long Beach Monday evening through Tuesday, the PMA reported. Conditions had improved somewhat on Wednesday, employers said. PMA confirmed that coastwide contract negotiations resumed Wednesday in San Francisco after a hiatus of several days. 7

8 North America Rail Operations BNSF has advised they are limiting volumes ex Chicago, Denver, Minneapolis-St Paul, and Omaha en-route to Seattle and Tacoma terminals. This is due to the elevated terminal and online inventory headed to these destinations. As needed, alternative gateway routings will be put into place. Truck Power Truck Power across the USA to perform import store door deliveries and export door pickups continues to be a major concern. Our Operation colleagues continue to bring on new trucks. There are no truck power issues in Canada and Mexico. Please see our Truck Power Map on OOCL.com for more information regarding advance timing required for door movements. Vessel/Loop Deployment Changes As advised in last week s newsletter, the members of the G6 Alliance have announced the temporary suspension of the Central China (CC2) service between Asia and the U S West Coast until further notice. The last sailing for CC2 will be OOCL Italy departing from Shanghai on October 31. All ports called by CC2 will be covered by other G6 Alliance services and our Service Route maps have been updated accordingly. North American Operations Global Gateway South (GGS) Terminal GGS has converted back to a grounded operation for import delivery. GGS has changed the rules on the appointment system and they are now instructing motor carriers to reschedule any missed appointments. Pacific Container Terminal (PCT) Due to congestion the terminal is moving all custom cleared 40 import local and store door delivery containers to an off dock depot facility (Shippers Transport) where it will remain on wheels for pick up. It may take up to three days to be transferred to the off dock facility. Importers are encouraged to monitor the SSA website for availability which will specify if the cargo is on terminal or at the off dock depot. TraPac Terminal productivity and chassis supply continue to improve. Yusen Terminals Inc. (YTI) Yard congestion and chassis shortages continue prolonging turn times and resulting in on dock rail delays. The congestion has forced YTI to slow import discharge from current working vessels which, in turn, has led to berth congestion and delayed vessel arrival. 8 Pacific Southwest Many of the Southern California marine terminals remain highly congested, although there are a few notable exceptions such as Long Beach Container Terminal (LBCT). However, even with the most highly congested facilities, the dayside or 1st shift gates remain fluid with relatively short truck queues and light yard traffic. Importers are encouraged to pick up during the 1st shift whenever possible as the transaction time is typically much shorter than the 2nd shift or pier pass gates. Long Beach Container Terminal (LBCT) Overall, OOCL dwell time remains low at LBCT. On most days, motor carriers may expect the following when visiting LBCT: o Healthy supply of 40 bare chassis o Reasonable gate queues and turn times o Consistent weekly gate schedules o Adequate sufficiency of manning LBCT continues to offer additional Friday evening gates. Chassis The chassis shortage seems to be easing a bit as many terminals are now starting the day with bare chassis. Dispatchers should contact the GACP to determine chassis supply and to identify alternative pick up locations if required. USA Midwest & South Central St Paul and Houston are all experiencing high volume and the BNSF is asking that containers out-gate as quickly as possible to alleviate congestion at the ramps. COCP Chassis Pool (Chicago & Midwest locations) has reached stress levels for 40 & 45. The DCCP (Denver Chassis Pool) is short of chassis and many import loads have been grounded at rail terminals. DCCP is also not releasing bare chassis for export shipments. Oakland, Tacoma & Seattle Oakland OICT chassis inventory is adequate. OICT will run a night gate on Nov.5th from 6pm- 3am for exports and empties in, empties out, and import deliveries at a cost of $50 per transaction that will be invoiced directly to the motor carrier doing the move; this

9 9 is coordinated directly by OICT mgmt and the trucker. Tacoma Washington United Terminal (WUT) remains congested due to import loads dwelling caused by ongoing rail car shortages. Vancouver Intermodal operations at both DeltaPort and Centerm Terminals are reported as normal. CN Montreal The CN had adequate cars on hand or enroute to evacuate the current intermodal containers at both CAST and Termont Terminals. New York Terminals All NYC marine terminals will be open on Election Day (Nov 4th) with the exception of Global Container Terminal (GCT) New York. Norfolk International Terminal Norfolk International Terminals (NIT) has extended the peak season operating hours for this weekend. NIT will be open on 11/8 from 7:00 a.m. 12:00 noon. Norfolk marine terminals will be open on Election Day (Nov 4th). The Empty Return Policy Matrix will be moved from the website to the website on Wednesday, November 5th. South Atlantic Intermodal operations in the region are reported as normal. Mexico Trucking services and Rail services are normal. Challenging the Norm in 107 Offices in 25 Different Countries