SSA’s DeNike says Port of Long Beach’s extension of free time was unfair.
A Port of Long Beach proposal to establish an off-dock lot where truckers can return empty containers is the latest in a series of steps to help relieve congestion that is undermining the flow of cargo.
But the recent decision to temporarily extend free time for shippers with cargo stuck on the docks was criticized by Ed DeNike, the president of SSA Containers, for coming at the expense of terminal operators.
The moves are primarily aimed at improving access to chassis, which are in critically short supply in Southern California because transportation service providers were caught flat footed by the recent introduction of much larger cargo vessels that arrive less frequently, but dump two or three times as much cargo at once. The situation has gotten worse in recent months because it is the peak season for retailers stocking up for the holidays.
Chassis leasing companies have been stretched beyond capacity by a confluence of other factors too. One problem is that wheeled platforms aren’t always available in, or near, a terminal where there is demand because ocean carriers are not consistently visiting the same terminals each week. Trans-pacific carriers increasingly are operating as part of alliances to conserve assets, and each week, a different alliance member operates a vessel carrying shared cargo and stops at its preferred terminal. Drop-and-hook operations by truckers, chassis hording by some beneficial cargo owners, and a maintenance backlog mean that much equipment is scattered miles from the ports or is out of service.
Long Beach port officials are taking a crisis-mode approach to the chassis and congestion situation. A Congestion Relief Team meets daily to monitor terminal performance and collaborate with industry stakeholders on potential solutions.
Jon Slangerup, the port’s new chief executive, wants to provide a yard in the harbor district where trucks could drop off empty shipping containers for temporary storage on their way to retrieve loaded import boxes at a marine terminal, according a port authority news release on Friday. The arrangement is designed to eliminate a trip to a congested terminal to drop an empty and then travel to another facility for a loaded box, or to wait in line for a crane lift at the empty area within a terminal.
The plan for an empty lot is currently under study.
Two weeks ago, the port authority began exploring how to establish its own fleet of more than 3,000 chassis that could be released at certain times to relieve market imbalances. They also engaged in talks with two major chassis leasing companies to provide temporary relief by relocating more equipment to the area.
Long Beach also granted shippers three days of extra free time on import containers during a two-week period to spare them storage costs because of terminal inefficiencies that are limiting the ability of shuttle drivers from making multiple deliveries each day. Truckers frequently report that they are stuck in lines at the gate for more than two hours, and for up to five hours or more at times, depending on the terminal and time of day. Logistics companies also face a shortage of port drivers because of the work conditions and stricter safety rules capping time behind the wheel to 11 hours, which together limit the number of revenue-bearing trips a driver can make.
DeNike, who heads terminal operations on the West Coast for parent company SSA Marine, said he was bothered by the Port of Long Beach’s unilateral decision to raise the free time allowance from four to seven days. “We’re paying the port approximately $250,000 a year per acre. When we have containers that are stockpiled in the terminal and can’t be picked up, and it’s not our fault, I don’t see a port authority not billing us for that acreage. So why should we be storing those containers at no cost to somebody?” he said during an American Shipper webinar on drayage congestion at North American ports.
The port tariff calls for shippers to be charged $44 for 40-foot containers for the first five days beyond the free-time limit and $87 per day after that, but the port authority doesn’t receive any of the money.
The extension “doesn’t cost them a dime. So the terminal operators end up having to absorb that free time. And that hurts in a couple ways. We get no revenue to pay for the land that they are billing us for. And then in a lot of cases, people just keep their containers there longer because they don’t have to pay for it,” DeNike said.
Motor carriers at several ports, who often get stuck paying demurrage on behalf of their customers, are complaining they shouldn’t be responsible for the fee when a big reason they can’t pick up boxes on time is because of problems at the terminal.
“We think it [demurrage] should be absolutely suspended. The artificial pressure to get inside a gate that you can’t get to, to pick up a container that’s ready to go, but has exceeded its free time, makes no sense,” Curtis Whalen, executive director of the Intermodal Carrier Conference at the American Trucking Associations, said on the webcast.
“You shouldn’t be able to generate revenues in a period of congestion where the other participants that are suffering this are the ones that have to pay it. There shouldn’t be revenue made by any of the participants in a period of congestion,” he said.
Long Beach proposes empty yard to alleviate chassis shortage
