Despite strong volumes, congestion problems still intact for West Coast ports

With West Coast port congestion-related issues still firmly intact, various industry stakeholders are pointing out that even though port conditions, especially at the Port of Los Angeles (POLA) and the Port of Long Beach (POLB) steps are being taken to help alleviate the current situation. But they caution that any type of immediate resolution or closure is not expected any time soon.

Even as the issue of congestion continues to loom over West Coast ports, volumes remain solid as retailers wanted to be prepared for the holiday season and not be caught short when it comes to having sufficient inventory levels.

But even with volumes at decent levels, the myriad issues surrounding West Coast port congestion do not appear to be lessening.

Stifel Nicolaus analyst David Ross observed in a research note that with holiday season approaching, concerns continue to mount over U.S. transportation network congestion

“While the dockworker labor dispute [between the Pacific Maritime Association and the International Longshore Warehouse Union] has not devolved to the level seen during 2002 (lockout/work stoppage), there are a number of other factors exacerbating already significant holiday peak bottlenecks,” Ross wrote. “While ocean freight volumes seasonally should fall from now to year-end, limited chassis supply, a driver shortage, strained intermodal networks, and clogged ports are likely to persist into 2015, causing problems for the entire U.S. transportation system.”

These factors cumulatively continue to result in a situation in which there do not appear to be a lot of easy answers either.

POLA Director of Communications Phillip Sanfield said that as of November 12, there were 11 ships at anchor collectively at POLA and POLB, with nine container vessels and two bulk carriers, and over the last month he noted there has been anywhere between 7 or 8 -to-10 or 14 ships at anchor at any given time, which is highly unusual, especially during Peak Season as there are rarely ships waiting at anchor to get into berths.

“It really has been an issue for a number of reasons, including bigger ships bringing larger quantities of cargo in at one specific time,” he said. “There is a greater complexity in cargo sorting when discharging the large volumes of containers. And the larger ships and the alliances that have formed have made for more complexities in sorting cargo.”

Sanfield also cited how the depleted trucker pool and the lack of available chassis to transfer ocean containers are also major contributors to the port congestion.

As for the latter, there is a working plan in place for a gray chassis pool, which is set to take effect on February 1, 2015. The Long Beach Press Telegram recently reported that the POLA brought together three major chassis providers and a terminal operator— Direct ChassisLink Inc., TRAC Intermodal, Flexi-Van and SSA Terminal—whom collectively have more than 95,000 chassis to create a pool system to share the chassis at the POLA and POLB complex.

These various issues, coupled with the timing of Peak Season and the ongoing labor negotiations, which appear far from an agreement, have created a perfect storm of sorts.

Sanfield stressed that the congestion is not a direct result of the labor issues, explaining it is part of the big picture, as well as a sensitive point with the ILWU believing PMA is calling them out for congestion issues.

“What we are saying is that there are a number of reasons out there, and the fact that there is no contact has not helped as we cannot have labor and terminal management at the table solving these issues when they are focused on solving their contractual issues,” he said. “We are working on all sorts of options. The chassis business model we think is a good step in the right direction and we are working closely with POLB on some of the other logistical issues, and the port has offered up some of its backland space during this congestion time to some of our terminals for either chassis storage or maintenance or actual cargo storage to relieve some of the capacity at the gates. When the gates have been operating at above a 90 percent utilization rate that is really unheard of because normally full operations would be at 80 percent. This is a highly unusual situation that we are trying to correct around the clock.”

POLB officials said that to so far in November cargo volume remains strong, which, in turn, continues to result in delays, due to a shortage of truck trailers and adding that it is working to establish a more consistent supply of truck chassis and is coordinating with all stakeholders to solve the current congestion issues that have slowed some shipments.

Freeing up more chassis is an approach the port is taking to address the backlog of cargo and POLB said that is done by finding a place in the Harbor District to receive and temporarily store the empty containers that terminals may not have room for at this time. This allows truckers to use a chassis to carry a loaded container, rather than sit idle with an empty container, the port explained.

Even with the current congestion issue largely still in a state of flux, it is not likely port operations will come to a halt for a number of reasons, according to Ben Hackett, founder of maritime consultancy Hackett Associates. 

“One reason is that more new equipment has been ordered and more chassis are coming on stream and secondly we are hitting the slack season so there is going to be less cargo coming in, and the carriers and stevedoring companies are sorting out how to best deal with the issue of the cargo,” Hackett said.  “It used to be 6K TEU ships coming in and now they are looking at 8-10K TEU ships.”

And the increased presence of carrier alliances calling on ports has been mixed, with Hackett saying the G6 Alliance carriers and their terminals have seen rough sailing in Los Angeles, due to a lack of equipment, lower productivity, and on-dock rail and truck availability.