Circumnavigating the choke points (page 3)

-- Logistics Management, 10/1/2005

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Ocean carriers also are looking at storing containers at yards that are located away from port property as a way to reduce congestion on the waterfront. Zaninelli says that OOCL routinely drays intermodal boxes to off-dock locations. "It costs us a little money but it saves on congestion problems," he explains.

Dockside trains dedicated to a single destination could also increase container throughput. Tacoma, for instance, has experimented with this concept and has been able to boost terminal capacity as a result. Further south, BNSF Railway is working with terminal operators in LA/Long Beach to develop such dedicated trains, says Thomas J. Plowman, BNSF's director of national account sales.

But one consultant thinks that ocean shippers may have to pay premiums to ensure on-time delivery and priority handling of their containers. "Shippers would have to pay for a better spot on the ship so the box is unloaded more quickly," suggests Chris Norek, a senior partner in the consulting firm Chain Connectors.

Cooperation Needed

At press time, port authorities, terminal operators, and independent industry observers were reporting that cargo was flowing smoothly and with few holdups through both Los Angeles and Long Beach.

According to the National Retail Federation's monthly "Port Tracker" report for August, congestion levels at those ports were low. Industry experts credit a number of factors, including more-efficient cargo-handling practices, the hiring of more longshore labor, PierPass, and shippers diverting cargo to other ports with easing terminal congestion.

Most experts, though, believe that the problem of maritime chokepoints won't be solved overnight. They believe that it will take a concerted, collaborative effort to fashion long-term solutions that will benefit all stakeholders.

It won't be easy. "This is going to have to be looked at and solved collectively in a cooperative way among industry, government, and the shipping community," says APL's Sappio. "It's a really daunting task."

LM Study: More Shippers Rerouting Cargo

Ocean shippers have started a new dance: The "Port Shift." A recent survey of Logistics Management readers who ship by ocean found that more than half of the respondents had recently changed ports. Nearly 200 ocean shippers responded to an online survey conducted in August.

Our survey provides substantial evidence that ocean shippers have become proactive on the issue of port congestion: Fifty-six percent of respondents said that they had rerouted some of their cargo through a different gateway to avoid a congested port.

Shippers don't seem to be especially bothered by higher costs; only 18 percent said they had rerouted shipments to avoid new port fees. Still, some were adamant that mounting costs would force them to rethink their routing. Marc Ferguson, director of logistics for Supervalu International, said the PierPass program at LA/Long Beach, which assesses $80 per 40-foot container handled during peak business hours, has prompted him to divert some cargo. In addition, said Ferguson, "LA/Long Beach is also considering an infrastructure fee, which will contribute to me moving more products through Seattle/Tacoma and Oakland."

Port congestion appears to be having some impact on shippers' relationships with their ocean carriers. Because steamship lines call at a limited number of ports in one geographic area, 36 percent of respondents were forced to switch ocean carriers when they changed ports.

One shipper who did so was John Janson, vice president of global logistics at Western Electronics. The contract manufacturer of electronic equipment imports about 1,000 containers each year. When Janson recently shifted inbound cargo from Long Beach to several Pacific Northwest ports, he had to change one of his steamship lines in order to get service out of Portland, Ore. Janson believes he had no choice. "We're manufacturing for someone else and running just-in-time," he explained. "We're 'fast-boating' on everything."

With that kind of business model, Western Electric can't afford delays. For now, at least, Pacific Northwest ports are better able to accommodate his company's needs than those in Southern California, he says.

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