Bill Mongelluzzo, September 23, 2014, JOC.com
Port executives admit that when it comes to fixing the problems that come with big ships and powerful carrier alliances, problems such as terminal congestion, equipment shortages and excessive truck turn times, the buck stops with them.
This admission by executives of the ports of Los Angeles, Long Beach, Oakland and Tacoma is unconventional in that those are landlord ports, and as such they have no direct control over the operations of shipping lines, terminal operators, chassis providers, railroads and truckers.
Nevertheless, the port executives told the annual conference of the Intermodal Association of North America Monday in Long Beach it is their responsibility to bring all of their tenants and stakeholders together to make ports facilitators of trade.
“The role of the port authority has changed. We’re not just rent collectors,” said Chris Lytle, executive director of the Port of Oakland.
Chassis shortages burst on the scene this year as significant contributors to congestion at largest U.S. port complexes, Los Angeles-Long Beach and New York-New Jersey. The equipment shortages and dislocations are the result of a decision by shipping lines to exit the chassis business and sell those assets to equipment leasing companies.
Steve Rubin, president of Horizon Lines, said the problems that have emerged in the new chassis regime should not have caught the ports by surprise. “It’s been two years that we’ve been talking about this,” said Rubin, who formerly served as a consultant on chassis issues through his consulting firm InterPro Advisory.
Long Beach and Los Angeles two years formed a working group with the goal of developing a neutral, or grey chassis pool. A consultant was hired and a report on options the group might follow was produced, but the effort was put on hold pending the conclusion of contract negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association.
Gene Seroka, executive director of the Port of Los Angeles, said that although the chassis providers are investing in equipment and working hard to improve service, the ports must take the lead to ensure that all of the stakeholders have a voice when decisions are made that will affect the entire port complex. “We need to be front and center on this,” he said.
Even though the port authorities do not own the chassis, their control of terminal leases gives them a strong voice in protecting the interests of all of stakeholders, said Jon Slangerup, executive director of the Port of Long Beach. “The role of the port authority is to be a facilitator, but we can control the dialogue because of the ports’ investment,” he said.
The ports of Seattle and Tacoma face the challenge of dealing with older, smaller terminals not designed to handle vessels with capacities of 8,000 20-foot container units that are now calling there.
“We have the highest percentage of under-utilized terminals on the West Coast. We’re not proud of it,” said John Wolfe, executive director of the Port of Tacoma. Seattle and Tacoma petitioned the Federal Maritime Commission for permission to discuss options that may be available for rationalizing terminal operations and making the facilities big-ship ready.
By rising above parochial interests and focusing their financial resources on what is best for the region, the Pacific Northwest ports can modernize their facilities in a collaborative effort rather than as competitors, Wolfe said.
In addition to modernizing their terminals to handle big ships, ports are working with terminal operators and shipping lines to address the operational complexities that vessel-sharing alliances have created for terminals, truckers and railroads.
Steve Bobb, executive vice president and chief marketing officer at BNSF Railway, said the railroads are learning how to deal with alliances whose vessels may call at four or five different terminals in the same port complex.
Railroads seek density in their operations. To improve efficiency at on-dock rail yards, the railroads prefer to build entire unit trains to single destinations. It seems that big ships would generate sufficient volume for unit trains, but “just the opposite” has occurred, Bobb said. By scattering vessel calls over multiple terminals, the alliances are making it harder to build large blocks of intermodal cargo for a single destination, he said.
The big ships are generating thousands of container moves during a single vessel call. This is contributing to congestion in the container yards and gates, which in turn is causing trucks to back up at the terminals.
Lytle said the time has come for ports such as Oakland to encourage terminal operators to revise their 20-year-old operating model that is contributing to congestion, and to extend their gate hours, or risk driving frustrated truckers out of the harbor. “The truckers must get the turns, or they won’t be successful. Oakland has to expand those hours,” he said.