Decision-makers urged to talk through solutions to congestion, identify actions and implement them.
Several port authorities have established multi-stakeholder working groups to try and address systemic inefficiencies that are causing costly shipping delays, but freight service providers and their customers remain thirsty for an overarching forum allowing them to find solutions that cut across multiple ports and regions of the country.
Some are looking toward the federal government to bring the parties together at a national level, but would welcome a neutral, third party serving as interlocutor for a dialogue on port productivity that brings together high-level executives from the ocean carrier, trucking, logistics, railroad, and marine terminal industries, as well as port authorities and government agencies with responsibility for regulating market activities and investing in infrastructure.
“If you’ve seen one port, you’ve seen one port,” is a common phrase among port officials. Each port is different—from its geographical contours, location and physical layout, to its size, customer base, commodity mix, community relations, governing structure, financial strength, and intermodal connectivity. It makes sense, therefore, that each port region works at the local level to identify and correct operational problems that contribute to congestion.
The Port of New York and New Jersey has led the way with the formation in December 2013 of a Port Performance Task Force, which last summer issued 23 recommendations to reduce truck congestion and emissions. The task force immediately formed a unique governing council to quickly find ways to implement the recommendations. One of the outcomes, so far, is the formation of a neutral chassis pool designed to make it easier for truckers to find the wheeled undercarriages needed to transport containers.
The ports of Los Angeles and Long Beach have created several joint working groups made up of customers, vendors and users, including shipping lines, cargo owners, labor, railroads, trucking interests, and equipment providers tasked with making the ports more efficient and competitive. One of the groups is focused on making improvements to smooth operations during the peak season now underway. Other working groups are addressing container terminal optimization, chassis, off-dock solutions, data and key performance measures, intermodal rail and drayage. The “supply chain optimization” effort stems from an agreement approved by the Federal Maritime Commission that allows the neighboring ports to discuss ways to improve the ports’ business competitiveness, environmental sustainability and security.
These port authority task forces grew from the realization that no constituent by itself could solve congestion problems such as the imbalance in chassis availability which wastes precious time as truckers drive around and wait in lines to find equipment for hauling containers. One of the main benefits of such exercises is that executives get to learn and understand how other parties in the port community operate, the pressures they face, and the impacts that any systemic changes would have on all stakeholders. A change can have unintended consequences for certain constituents if not carefully thought through in advance with everyone at the table.
But executives say they are looking for a broader forum where thought leaders can exchange ideas on how to better share data and update traditional business processes that transcend local operations.
Experts participating in the Virginia Maritime Association’s annual mid-May conference in Norfolk reached consensus on the need to establish a structure for regular meetings where chief executive officers and other high-level executives can gather on a regular basis at a national or regional level and iron out many of the interconnected issues that hinder port productivity.
Industry representatives on the Commerce Department’s Advisory Committee on Supply Chain Competitiveness are working to come up with recommendations for Secretary Penny Pritzker to spur federal involvement in port improvement efforts, especially in infrastructure areas such as harbor deepening and highway expansion. At the group’s June 24 meeting in Washington, some representatives expressed a desire for the government to speed up issuing antitrust exemptions for cooperative agreements.
The FMC this year has granted the ports of Seattle and Tacoma, as well as Los Angeles and Long Beach, permission to jointly discuss and tackle congestion issues, transportation infrastructure needs and environmental problems caused by port activities. Seattle and Tacoma have gone further, actually forming an alliance aimed at strengthening the region’s competitiveness by unifying terminal investments, operations, planning and marketing, rather than fighting among themselves for cargo and resources.
Rick Gabrielson, vice president of transportation for Lowe’s and chairman of the Freight Policy and Movement Subcommittee, said the advisory committee wanted to get “a lot more engagement from the secretary’s office in bringing the different parties together.”
In mid-July, the FMC issued a report on U.S. port congestion based on findings from four regional forums it held last fall as conditions worsened at several ports on both coasts.
One idea mooted in the report is the potential creation of an industry-led advisory council to the FMC. This national level federal advisory committee—perhaps titled the National Council on Intermodal Supply Chain Efficiency—would help facilitate discussion and resolution of issues of national importance.
The advisory committee could prove useful at offering suggestions for the FMC’s regulation of detention and demurrage charges, which shippers say terminal operators and ocean carriers have unfairly applied for late container pick-ups and equipment returns when access to terminals is significantly constricted by poor operating practices. The council of outsiders might also be able to conduct a critical reassessment of how to modernize systems and procedures used by port authorities, operators and service providers to enhance container velocity and reduce supply chain costs.
However, the report noted there already exists the Commerce Department’s supply chain advisory committee and the Department of Transportation’s National Freight Advisory Committee—not to mention the Department of Homeland Security’s Commercial Operations Advisory Committee (COAC) that focuses on customs, security and trade facilitation.
“Some current and longer-term issues affecting port congestion and supply chain efficiency need to be addressed at the national level, not locally, if they are to be fully effective,” the FMC report stated. “Although the challenges facing our ports and the international supply chain are not new or necessarily limited to the U.S., there are no easy solutions to some of them. Divergent commercial interests, pressures and responsibilities in global supply chains could make some solutions difficult to achieve. Because supply chain effectiveness, reliability and resilience depends on continual adaptation to the dynamics of global trade, there was not much support for governmental prescriptions or requirements particularly as most participants saw government agencies as being organized in silos and generally regulate one mode of transportation or one set of stakeholders. However, participants at the forums did express support for a dedicated port and supply chain disruption group composed of high-level executives of international supply chain organizations to address efficiency challenges and threats on a sustained and continual basis. Several participants felt that potential threats to port and supply chain disruption deserve permanent, continual collaboration and consistent attention by all organizations interested in the success of intermodal transportation.”
Inter-regional forums of senior leaders from the private and government sectors are needed because there are best practices, infrastructure investment priorities and information sharing that should be applied across port regions and freight corridors, Virginia Maritime Association panelists stated, as outlined in an upcoming white paper on port congestion produced by American Shipper. Executives should be organized in sub-groups to tackle specific problems. Participants pointed to their rehearsal dinner the night before the conference as a valuable example of how good ideas can be exchanged by high-level executives in an intimate setting and said they sought to replicate that type of discussion through the forums.
The dialogue “needs to be more global and systemic” in order to change traditional industry practices, Ken Kellaway, CEO of RoadOne Intermodal Logistics, said.
Some ports have held one-off “summits” to gather local industry input, but should set up a process for regular meetings, the logistics experts said.
The Virginia Port Authority, for example, held a couple of port productivity meetings last year, which were well received by shippers and service providers alike. Domenick Braico, global logistics leader for resins and chemicals at Honeywell, said during the VMA conference that having random meetings isn’t enough to get things corrected in a reasonable period of time. Stakeholder task forces should continually be working in tandem with port authority officials to develop solutions for the short, medium and long term, according to the white paper.
Virtual container yards are an example of a possible solution that requires multi-stakeholder engagement. Exchanging import containers in the field, rather than at the port terminal, with exporters that need an empty container is much more efficient in terms of truck and labor utilization, pollution and cost, but requires close collaboration between ocean carriers, chassis providers, motor carriers, shippers and software vendors to properly execute. Pulling off such a system can’t be achieved in a couple of listening sessions, experts said.
Operating in silos and lack of end-to-end supply chain communication are also problems plaguing large cargo airports.
Users of Chicago’s O’Hare International Airport have felt the sting of heavy congestion this year, which has disrupted cargo flow and created additional expenses for freight forwarders and shippers. A range of underlying factors have contributed to the backlogs, but logistics professionals in the area say that old ways of doing business have not kept up with changes in volume, infrastructure, and technology and that companies strive to optimize their operations without considering how it impacts other parties or the cargo eco-system as a whole.
“We need to have a better line of communication. The key stakeholders haven’t all been together in the same room to understand what’s unique to each other’s business,” Scott Case, a marketing expert with a long background in customs brokerage who is helping organize a local airport working group, said. “The ground handlers look at things from the perspective that they are the airlines’ service provider. The airlines look at things through the prism of the forwarder as their customer. The trucker also responds to the forwarder. So they all look at one piece and don’t appreciate what other stakeholders one positioned removed have to deal with.”
Long lines of trucks could be alleviated, he suggested, with better advance communication about delays and cargo availability so dispatchers can reroute trucks to other jobs.
VMA White Paper. The white paper that grew out of the Virginia Maritime Association’s port congestion conference offered a series of recommendations for private companies and port authorities.
In addition to the formation of industry task forces, the white paper urges port communities to make better use of technology to space out the arrival of trucks into marine terminals; improve chassis availability; step up collaboration within vessel alliances, between alliances and marine terminals; and upgrade the efficiency of terminals.
This article was published in the September 2015 issue of American Shipper.