As the clock clicks closer to the holidays, strong volumes are expected despite congestion problems at Los Angeles County ports
Retailers are expecting a robust holiday season and don’t want to be caught short on inventory. So the volumes are not the issue. 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.”
There are no easy answers to the problems. 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 major contributors to the port congestion.
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 agreement, have created a perfect storm.
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.” Even with the current congestion issue largely still in a state of flux, it is not likely port operations will come to a halt.