Port squeeze threatens U.S. retailers’ holiday stocking plans -Reuters

Port squeeze threatens U.S. retailers’ holiday stocking plans -Reuters
11:50am EDT
By Nandita Bose and Lisa Baertlein

CNP

Please take note of the latest information we received today, via a report by Reuters News Bureau. Much of what is said is reiterated from previous reports , but it seems evident that the ILWU unresolved contract with the Pacific Maritime Association is beginning to have more of an effect on the situation as well.

 

Port squeeze threatens U.S. retailers’ holiday stocking plans -Reuters

11:50am EDT
By Nandita Bose and Lisa Baertlein
CHICAGO/LOS ANGELES (Reuters) – A shortage of transportation equipment and possible labor disruptions at the Los Angeles/Long Beach port complex, ​the nation’s busiest, is delaying shipping containers for up to three weeks, threatening timely delivery to retailers for the holiday season.
The delays are affecting retailers including JC Penney Co, Macy’s Inc,  Kohl’s Corp, Nordstrom Inc, American Eagle, Ralph Lauren and Carter’s, according to three people with direct knowledge of the situation. Retail giant Wal-mart Stores Inc, recently diverted 300 shipment containers to Oakland to avoid the congestion, one person said. Wal-Mart declined comment.
The problem stems from a shortage of trucking equipment, called chassis, but the National Retail Federation in a statement said protracted labor negotiations were an issue, too. The International Longshore and Warehouse Union declined comment on whether talks were having an effect.
Most retailers acknowledged the delays at the key ports for shipments from Asia, but said they did not anticipate product shortages during the holidays. Even so, any delay can derail a finely calibrated just-in-time inventory control system, making it costlier for retailers to put merchandise on the shelves.
“It’s a domino effect,” said Nate Herman, vice president of international trade at the American Apparel and Footwear Association. “When there is an interruption, things degenerate quickly.”
With major port contracts up for renewal this year, retailers including Wal-Mart ordered early and prompted a surge of deliveries in June and July, port statistics show. But significant volume still arrived during the traditional August-October period that precedes the November-January holiday shopping season.
“There will be a scramble to restock shelves this holiday season,” said Mark Hirzel, president of the Los Angeles Customs Brokers and Freight Forwarders Association. “The delays are running into two to three weeks.”
Cargo containers typically take two to three days to move out of the port.

IDLE CONTAINERS
A freight forwarder who spoke to Reuters on condition of anonymity said holiday merchandise for retailers like JC Penney, Macy’s, Kohl’s and Nordstrom that landed at the Los Angeles port two weeks ago still has not cleared the port.
An apparel importer who declined to be named said American Eagle, Ralph Lauren and Carter’s shipments from Bangladesh have been stuck for over two weeks. “We simply don’t know when these shipments will move out,” the source said.
An American Eagle spokeswoman declined comment on the delays.
JC Penney and Macy’s both said they did not anticipate significant delay-related issues. A Nordstrom spokeswoman said the company was contacting vendors for information.
Wal-Mart, Kohl’s, Ralph Lauren and Carter’s did not respond to requests seeking comment.

DISPUTE ABOUT CAUSES
Outside the gates of Los Angeles/Long Beach Seaport on busy days, trucks stand in mile-long queues, even as stacks of unmoved containers wait for pickup at a complex that handles 40 percent of U.S. container cargo. ​​The Port of New York and New Jersey is also affected, but to a lesser extent.
Val Noronha, president of Digital Geographic Group, said the company’s GPS tracking data showed a third of trucks took more than two hours to enter and leave the port, compared to about one fifth taking that long in June of 2010.
Geoffrey Hanna, vice president of textile importer Henry W. Peabody & Co., said some truckers have refused to go to the ports because of long wait times. It took his firm more than two weeks to get a recent shipment out, Hanna said.
The disruptions stem from the move by shipping lines, which struggled during the recession, to sell container trailers and other non-core assets to equipment leasing companies, port sources and outside experts said. The change sent roughly 8,000 truckers that serve the port each day scrambling to find chassis.
The backlog of containers is creating extra work. Statistics from the Pacific Maritime Association, which represents 29 ports along the West Coast, show hours paid to terminal workers jumped 24 percent this September over the same month last year. Last month, 750,850 inbound containers arrived at the Los Angeles/Long Beach complex, up almost 11 percent from a year ago, the port statistics show.
Several retailers and importers are considering alternatives such as Houston or East Coast ports, Hirzel of Los Angeles Customs Brokers and Freight Forwarders Association said.
“It will cost more and take longer but they want certainty,” he said. “In this situation, there is value in certainty.”

 

LA/LGB Port Situation

Please note the latest information as published in the Journal of Commerce. LA/LB still a mess with no end in sight!

Congestion at the ports of Los Angeles and Long Beach grew worse over the weekend, with no relief in sight as late peak-season container volumes descend on the largest U.S. port complex.

“The vessels keep arriving and the trucks keep arriving,” said John Cushing, president of PierPass Inc., which manages the extended gates program for the 13 container terminals in the port complex.

Cushing said terminal operators are spending millions of dollars and taking extraordinary steps, including running very costly “hoot owl” shifts from 3 a.m. to 8 a.m. to relieve congestion in their container yards. But the cargo keeps building up at the terminals. According to the individual ports, combined container throughput in 2014 through August at the Ports of Los Angeles and Long Beach are 4.5 percent higher than the same period in 2013.

Each terminal operator has a slightly different story to tell. Some terminals say the congestion ebbs and flows depending upon chassis availability. A terminal will get enough chassis for several consecutive days to clean out its yard, but then the equipment supply dries up and the terminal is congested again.

“There are times when the imports are not moving. The numbers are outrageous —6,000 to 7,000 containers just sitting at the terminals,” he said.

Another terminal operator said he is working only two cranes each week against a vessel with a capacity of 10,000 20-foot containers, rather than five cranes as he should be, because the yard can not absorb any more boxes. Vessel operations are slowing down to the point where some terminals are in danger of having to tell vessel operators to slow down their arrivals because the ships can not be handled on schedule.

Large North American gateways such as Los Angeles-Long Beach, New York-New Jersey and Vancouver, Canada, have been struggling with congestion problems on and off throughout the year. The ripple effect of brutal winter weather in the eastern half of the continent, congestion and rail car shortages on the rail networks, truck and driver shortages and chassis dislocations are well documented.

In Southern California, truckers and terminal operators point to chassis being in short supply, in the wrong place at the wrong time or chassis being out-of-service as being the main culprit.

“Chassis are the Achilles’ Heel here,” said Fred Johring, president of Golden State Express and chairman of the Harbor Trucking Association of Southern California.

Ocean carriers earlier this year exited the chassis business in Los Angeles-Long Beach and New York-New Jersey, selling the assets to chassis leasing companies. Terminals on both coasts immediately began to report that they did not have enough chassis, not because the overall supplies in the harbors were reduced, but because the business relationships involving cargo interests, shipping lines, terminal operators and chassis providers had changed.

Suddenly, truckers were told by a terminal that the chassis they needed were no longer being stored at the terminal, so the truckers had to make an extra trip to a location where the chassis suppliers stored the equipment. In instances where a terminal had chassis, many more chassis than usual were being “red-tagged” as being out of service and in need of repair.

Terminal operators say the chassis providers are refusing to pay the suddenly high repair costs that terminals with International Longshore and Warehouse Union labor are charging, or the chassis providers would only authorize repairs during the 8 a.m. to 5 p.m. day shift to avoid overtime pay. Chassis providers say they are authorizing repairs as quickly as they can, and have indicated to the ports that there are not enough skilled mechanics at the terminals to do the work.

As containers back up at the terminals, ILWU labor is working overtime just to do the normal work of unloading vessels, cleaning out the yards and processing trucks into and out of the facilities. According to figures posted on the website of the Pacific Maritime Association, the container volumes handled in Los Angeles-Long Beach in August were up 1 percent from August 2013, but the man-hours paid by the terminals were 20 percent higher.

Citing those numbers, PMA President Jim McKenna said, “when we’re using 20 percent more labor to do 1 percent more volume, we’re doing a lot of work.”

McKenna put the problems at the ports squarely on the shoulders of the chassis issue. “The root of all evils in the harbor is the chassis shortage,” he said.

The extra moves that longshoremen must make each day to clean up the container backlog are sucking up skilled labor, and terminals are reporting that the PMA has begun to rationalize the dispatching of positions like top handlers and rubber-tired gantry operators. Those positions can not be handled to part-time workers, known as casuals.

The extra work is also forcing terminals to use a higher percentage of casuals for driving yard tractors and other positions they can fill, but productivity normally drops when the percentage of casuals increases.

Terminal operators say a shortage of truck drivers both in the harbor area, and at the warehouses in the Inland Empire 50 miles from the ports, is causing the dwell times for containers and chassis to skyrocket. Alex Cherin, executive director of the Harbor Trucking Association, said the HTA saw the driver shortage surface several years ago as a result of the clean-trucks program in Southern California. The truck and driver population of mostly owner-operators went from 15,000 to less than 10,000 as non-compliant trucks were phased out.

HTA took actions such as helping to develop a driver training program at a local community college, but the overall problem was masked by the economic recession. Now that the recession is over, the driver shortage is all too apparent, he said.

“You hear more about it on the drayage side, but it exists throughout the industry. It’s a national problem,” Cherin said.

As a result, hundreds of chassis with empty containers are sitting idle at the 1.5 billion square feet of warehouse and distribution facilities throughout Southern California, effectively taking the chassis out of use. Trucking companies say the beneficial cargo owners are so desperate to get their inbound loads that they are telling drivers not to bring the empties back to the harbor and be forced to wait two hours or longer to be processed, but rather to go “bobtail” right to the harbor as soon as the inbound containers are cleared for pickup.

Terminal operators confirm that the number of dual transactions (empty container into the terminal and loaded import container out of the terminal) have plummeted. Cushing said that PierPass is meeting with chassis providers, truckers, shipping lines and terminal operators in an attempt to work out at least a short-term solution to problem. After having met with executives of the three largest equipment providers — Direct ChassisLink Inc., Flexi-Van and Trac Intermodal — PierPass was told a long-term solution to the chassis problems will not materialize until early 2015, Cushing said.

LA PORT SITUATION

”   Please note the latest information as published in the Journal of Commerce. LA/LB still a mess with no end in sight!

Congestion at the ports of Los Angeles and Long Beach grew worse over the weekend, with no relief in sight as late peak-season container volumes descend on the largest U.S. port complex.

“The vessels keep arriving and the trucks keep arriving,” said John Cushing, president of PierPass Inc., which manages the extended gates program for the 13 container terminals in the port complex.

Cushing said terminal operators are spending millions of dollars and taking extraordinary steps, including running very costly “hoot owl” shifts from 3 a.m. to 8 a.m. to relieve congestion in their container yards. But the cargo keeps building up at the terminals. According to the individual ports, combined container throughput in 2014 through August at the Ports of Los Angeles and Long Beach are 4.5 percent higher than the same period in 2013.

Each terminal operator has a slightly different story to tell. Some terminals say the congestion ebbs and flows depending upon chassis availability. A terminal will get enough chassis for several consecutive days to clean out its yard, but then the equipment supply dries up and the terminal is congested again.

“There are times when the imports are not moving. The numbers are outrageous —6,000 to 7,000 containers just sitting at the terminals,” he said.

Another terminal operator said he is working only two cranes each week against a vessel with a capacity of 10,000 20-foot containers, rather than five cranes as he should be, because the yard can not absorb any more boxes. Vessel operations are slowing down to the point where some terminals are in danger of having to tell vessel operators to slow down their arrivals because the ships can not be handled on schedule.

Large North American gateways such as Los Angeles-Long Beach, New York-New Jersey and Vancouver, Canada, have been struggling with congestion problems on and off throughout the year. The ripple effect of brutal winter weather in the eastern half of the continent, congestion and rail car shortages on the rail networks, truck and driver shortages and chassis dislocations are well documented.

In Southern California, truckers and terminal operators point to chassis being in short supply, in the wrong place at the wrong time or chassis being out-of-service as being the main culprit.

“Chassis are the Achilles’ Heel here,” said Fred Johring, president of Golden State Express and chairman of the Harbor Trucking Association of Southern California.

Ocean carriers earlier this year exited the chassis business in Los Angeles-Long Beach and New York-New Jersey, selling the assets to chassis leasing companies. Terminals on both coasts immediately began to report that they did not have enough chassis, not because the overall supplies in the harbors were reduced, but because the business relationships involving cargo interests, shipping lines, terminal operators and chassis providers had changed.

Suddenly, truckers were told by a terminal that the chassis they needed were no longer being stored at the terminal, so the truckers had to make an extra trip to a location where the chassis suppliers stored the equipment. In instances where a terminal had chassis, many more chassis than usual were being “red-tagged” as being out of service and in need of repair.

Terminal operators say the chassis providers are refusing to pay the suddenly high repair costs that terminals with International Longshore and Warehouse Union labor are charging, or the chassis providers would only authorize repairs during the 8 a.m. to 5 p.m. day shift to avoid overtime pay. Chassis providers say they are authorizing repairs as quickly as they can, and have indicated to the ports that there are not enough skilled mechanics at the terminals to do the work.

As containers back up at the terminals, ILWU labor is working overtime just to do the normal work of unloading vessels, cleaning out the yards and processing trucks into and out of the facilities. According to figures posted on the website of the Pacific Maritime Association, the container volumes handled in Los Angeles-Long Beach in August were up 1 percent from August 2013, but the man-hours paid by the terminals were 20 percent higher.

Citing those numbers, PMA President Jim McKenna said, “when we’re using 20 percent more labor to do 1 percent more volume, we’re doing a lot of work.”

McKenna put the problems at the ports squarely on the shoulders of the chassis issue. “The root of all evils in the harbor is the chassis shortage,” he said.

The extra moves that longshoremen must make each day to clean up the container backlog are sucking up skilled labor, and terminals are reporting that the PMA has begun to rationalize the dispatching of positions like top handlers and rubber-tired gantry operators. Those positions can not be handled to part-time workers, known as casuals.

The extra work is also forcing terminals to use a higher percentage of casuals for driving yard tractors and other positions they can fill, but productivity normally drops when the percentage of casuals increases.

Terminal operators say a shortage of truck drivers both in the harbor area, and at the warehouses in the Inland Empire 50 miles from the ports, is causing the dwell times for containers and chassis to skyrocket.  Alex Cherin, executive director of the Harbor Trucking Association, said the HTA saw the driver shortage surface several years ago as a result of the clean-trucks program in Southern California. The truck and driver population of mostly owner-operators went from 15,000 to less than 10,000 as non-compliant trucks were phased out.

HTA took actions such as helping to develop a driver training program at a local community college, but the overall problem was masked by the economic recession. Now that the recession is over, the driver shortage is all too apparent, he said.

“You hear more about it on the drayage side, but it exists throughout the industry. It’s a national problem,” Cherin said.

As a result, hundreds of chassis with empty containers are sitting idle at the 1.5 billion square feet of warehouse and distribution facilities throughout Southern California, effectively taking the chassis out of use. Trucking companies say the beneficial cargo owners are so desperate to get their inbound loads that they are telling drivers not to bring the empties back to the harbor and be forced to wait two hours or longer to be processed, but rather to go “bobtail” right to the harbor as soon as the inbound containers are cleared for pickup.

Terminal operators confirm that the number of dual transactions (empty container into the terminal and loaded import container out of the terminal) have plummeted. Cushing said that PierPass is meeting with chassis providers, truckers, shipping lines and terminal operators in an attempt to work out at least a short-term solution to problem. After having met with executives of the three largest equipment providers — Direct ChassisLink Inc., Flexi-Van and Trac Intermodal — PierPass was told a long-term solution to the chassis problems will not materialize until early 2015, Cushing said.  “

 

Congestion, Chassis Shortages, and a Lumber Fire – Issues the West Coast Ports Face

 

Congestion, Chassis Shortages, and a Lumber Fire – Issues the West Coast Ports Face

 

West Coast port executives have admitted that big ships and carrier alliances are contributing to terminal congestion, equipment shortages, and excessive truck turn times.  Although the executives of the ports of Los Angeles, Long Beach, Oakland, and Tacoma have no direct control over the operations of shipping lines, terminal operators, chassis providers, railroads, or truckers, they agree on needing to take a proactive approach in bringing all of their tenants and stakeholders together to make the ports “facilitators of trade.”

 

Chassis shortages became an issue this year as a result of the shipping lines exiting the chassis business by selling those assets to equipment leasing companies.  It is now up to the trucking companies to rely on chassis pools and leasing companies to provide the equipment however, the demand is high and the chassis availability is insufficient.

 

The current congestion in the Ports of Los Angeles and Long Beach is also being amplified by larger vessels calling at the terminals.  Larger vessels mean more containers, causing some that have already been offloaded to be “buried” by others coming in after them.  This can cause some containers to be delayed by a week or two, while others may move normally simply because they were placed on top of the “pile.”

 

On top of congestion and chassis shortages, the Port of Los Angeles closed its terminals and the Alameda Corridor at 8:30 a.m. today due to air quality concerns resulting from a lumber fire at the port.  The TTI terminal at Long Beach was also closed for the day, but hopes to reopen tonight at 6 p.m.  It has been reported that a welding torch ignited World War II-era pylons soaked in creosote at the Pasha break bulk terminal around 6:40 a.m. this morning.  No injuries have been reported at this time.

By Marisol International

 

 

LA PORT AND CHASSIS CRISIS UPDATE

LA PORT AND CHASSIS CRISIS UPDATE

LA and Long Beach ports are continuing to face severe congestion, from both increased peak season volumes, as well as chassis shortages and dislocation.   Almost every ocean carrier has divested themselves of chassis ownership over the last several years, which has led to truckers increasingly struggling with chassis availability from third parties. 

The problem is varied.   Some terminals are running short or completely out of good order working chassis, either due to high demand or due to the chassis being out of service and in need of repair.   Some terminals have surpluses which can’t be used because the chassis owners don’t always maintain a sharing agreement with other terminals.  Additionally, those chassis that are in the pool are frequently in use for longer amounts of times as containers wait to be unloaded at busy distribution facilities.  Some terminals have stopped taking appointments altogether, and others won’t give appointments until containers are on wheels.

Warehouses are backed up in many cases and are unable to unload containers in time causing them to be stuck “on wheels” at these facilities, instead of being returned with the empties back to the terminal.

While carriers in the past would assist with last free day issues resulting from a lack of chassis, the divestiture and large scope of the problem is trending towards carriers becoming increasingly unwilling or unable to intervene with the terminals to extend free time.  

We are noticing that certain terminals are turning carriers away even after they’ve been on line for hours.

In addition to delays, these problems have hit truckers pockets. Carriers are increasing base rates by 20%. They are also charging for dry runs (when turned away at the port) and increased waiting time at the ports in an effort to compensate drivers who are dealing with the long delays and inability to pick-up containers. They are offering sign-on bonuses as well as the increased wages to attract more drivers to assist with the increased volume.

The current policy of free drops in the LA/LB drop zone is not being honored by many truckers, and shippers are having to pay additional drayage charges when empties are not available for return.

We will continue to keep a close eye on the situation and as always position ourselves to handle your drayage requirements in LA/Long Beach.