Meanwhile, a Department of Transportation agency is expected to soon establish a working group to develop a port performance statistics program.
A federal advisory committee comprised of more than two dozen industry representatives has presented Commerce Department Secretary Penny Pritzker with a list of operational and infrastructure recommendations for reducing congestion in large seaports, and their connecting roads and railways.
Potential solutions the port sector and policymakers should consider include the adoption of “free-flow” container stacks, reducing “free time” granted to shippers to store containers at terminals, merging marine terminals to better handle mega-vessels, and speeding up harbor dredging, the Advisory Committee on Supply Chain Competitiveness (ACSCC) said in its report.
“Congestion at America’s seaports and inland infrastructure is an increasingly severe threat to the reliability and efficiency of U.S. industries and supply chains. Over the past decade, it has become evident that the operational systems and infrastructure at our seaports and inland links are not being improved comprehensively and rapidly enough to handle the growth of U.S. trade and quickly-changing maritime industry and shipping trends,” the report said.
“Many analysts believe that America’s supply chains are losing their competitive advantage in global markets, as congestion and our inability to keep pace with other nations’ improvements reduce our supply chains’ ability to meet global shipping reliability and cost demands. As a result, congestion at our ports and other points in our intermodal system has become a serious risk factor for both America’s supply chains and our Nation’s economic and trade growth.”
ACSCC members include Rick Gabrielson, vice president of transportation at Lowe’s; Dean Wise, vice president of network strategy at BNSF Railway; and Leslie Blakey, president of the Coalition for America’s Gateways and Trade Corridors.
The recommendations stem from systematic performance failures at major container ports during the past three years as the maritime supply chain struggled to adjust to new industry dynamics presented by the introduction of ultra-large vessels and the expansion of ocean carrier alliances.
The vessel sharing alliances have helped the struggling liner industry reduce costs because companies can consolidate their cargo on partner ships to maximize capacity utilization. In fact, 94 percent of containers handled by U.S. West Coast ports move on ships belonging to one of the four major carrier alliances. But the practice has resulted in massive surges of cargo at a single terminal, rather than being spread out across a complex, making it difficult for terminals, railroads and motor carriers to find labor, equipment and storage space to handle the containers in an efficient manner.
The situation reached a breaking point a year ago when negotiations over a new labor contract for dockworkers at West Coast ports hit a wall, resulting in a work slowdown that virtually froze cargo movement for several weeks. Many importers and exporters suffered damage from lost sales when they were unable to meet delivery commitments, spoilage of perishable cargo, and extra transportation costs associated with emergency re-routing of cargo to other ports and modes.
The recommendations were finalized at the ACSCC’s last quarterly meeting almost four weeks ago. ACSCC members say their intent is to present a check list of best practices port directors can use to think through performance challenges at their facilities and get the federal government to facilitate discussions with all relevant stakeholders to address problems that require coordinated solutions.
The federal government has limited ability to directly influence port operations because most of the infrastructure is owned and operated by local or state governments, or the private sector. But the government can play a larger role when it comes to infrastructure investment, funding harbor deepening and acting as a mediator during waterfront labor disputes, according to the report.
“Where federal government involvement can directly resolve port congestion issues, or reduce their impacts, federal action should be swift and decisive,” the report said in an indirect reference to the Obama administration’s long wait before getting Labor Department officials involved as mediators in the standoff between the longshoremen’s union and waterfront employers.
And, while many of the ideas mentioned in the document are already being implemented at several ports, industry officials familiar with the ACSCC say businesses are more likely to collaborate in joint working groups when the request comes from the Secretary of Commerce, the Department of Transportation or the Federal Maritime Commission.
The ports of Los Angeles and Long Beach, for example, already have “free flow” pilot programs in which containers for certain consignees or destinations are grouped and lifted onto trucks from the top of the pile, in contrast to the more time-consuming traditional method of culling through stacks to dig out an assigned load for each trucker. The method is also referred to as “peel-and-go.” The two ports, as well as others, have also convened working groups that meet on a regular basis to address operational pinch points, as well as long-term planning.
The ACSCC’s recommendation for ports to reduce the amount of free time comes with a caveat that “shippers should not be unduly penalized during periods of high port congestion and/or insufficient container chassis supply.” Shippers and motor carriers complained loudly after being slapped with late fees by terminal operators last year, when long queues or the lack of available chassis prevented them from picking up or delivering their cargo within the prescribed window of time. They argued those conditions, which were exacerbated by the dockworker labor issues, were out of their control and, therefore, they shouldn’t have been penalized.
The ACSCC also called for better data sharing between carriers, shippers and chassis providers to help ensure enough equipment is on hand to accommodate cargo volumes and for continued Federal Maritime Commission sanctioning of multi-sector discussion groups to address port productivity, as well as interoperable chassis pools.
Port authorities and terminal operators should re-evaluate their physical layout and governance structures to consolidate footprints where possible to more efficiently handle cargo volumes and mega-vessel surges, the committee said.
(For an in-depth examination of whether port authorities should merge terminals, read the feature story “Terminal Rationalization” in the February issue of American Shipper.)
Another reaction to the gridlock emanating from the West Coast port labor impasse was the inclusion by Congress in December’s surface transportation authorization, the FAST Act, of a provision requiring the Department of Transportation to establish a program for collecting performance metrics at the top 25 ports, as measured by tonnage and container volume.
The Bureau of Transportation Statistics is expected to soon issue a Federal Register notice soliciting volunteers for a working group tasked with developing a set of metrics and how to collect the statistics. The working group will include representatives from the FMC, Customs and Border Protection, the Army Corps of Engineers, and other agencies, as well as one representative each from the rail, trucking, marine terminal and maritime industries. Port authorities will also get one representative, while labor unions will have multiple seats on the committee.
Last month, the National Retail Federation and other business groups, recommended that the DOT’s port performance statistics program include metrics on berth productivity, yard productivity, truck gate operations and on-dock rail operations.
The American Association of Port Authorities supports the intent of improving port performance through better data, but hopes the metrics selected will actually be effective tools and won’t be used to compare ports to each other because ports have different characteristics and move different commodities, Susan Monteverde, AAPA director of government affairs, said.
Federal advisory committee makes recommendations for improving port productivity
