Levers of inbound
An inside look at how APL ties vessel, terminal and intermodal pieces together.
The APL Holland’s arrival in the Port of Los Angeles at 5 p.m. on Sept. 29 triggered what appeared to be a flawless response at Eagle Marine Services’ terminal, as both humans and machines prepared to engage the fully laden containership.
The terminal’s actions were not precipitated by the ship’s mere sighting on the horizon. Rather the event was anticipated weeks, if not months, in advance of the vessel’s arrival.
The master schedule for this ship, along with the entire APL fleet for that matter, is meticulously detailed upwards to a year in advance by a cadre of planners in the NOL Group, parent for both Eagle Marine and the APL liner service. The schedule is routinely analyzed, updated and made transparent throughout the company’s far-flung multifaceted operation.
‘The schedule reflects a highly coordinated integration of both our commercial and operational imperatives,’ said Nathaniel Seeds, APL’s vice president of network operations in the Americas region, during an interview at Eagle Marine’s Los Angeles terminal building. ‘It even tells us on what side the ship will be tied up at the berth.’
‘We know where every container is and its priority coming off each vessel long before they arrive,’ added Jack Cutler, Eagle Marine’s port manager in Los Angeles.
This is a side of the container transport business that many shippers never see. All they know is that they booked their cargo with the carrier and expect it delivered to a certain location at a set date and time.
However, due to the unexpected acceleration in cargo volumes in 2010, it appeared to many shippers that liner carriers in the transpacific had lost control of their transportation networks by suddenly experiencing severe congestion in both Chinese and Southern California ports, tightening space on containerships, and deteriorating service reliability. Shipper relationships with many carriers slipped to a new low.
APL makes it a point on a near-weekly basis to host shipper representatives at its three West Coast terminals to provide them a better understanding of what actually takes place behind the scenes to ensure their freight moves efficiently.
‘We believe there’s a great appreciation among our customers for what we do,’ said Bob Sappio, senior vice president of Pan-American trade for APL. ‘People really care about predictability in their supply chain, and we show them how we do it.’
APL gives its vessels a four-hour tolerance for when they’re scheduled to arrive in port. The reason for this is to allow two hours for customs and other regulatory processing of the ship’s crew and cargo before any discharge or loading work begins. ‘With this, we’re afforded 100 percent on-time arrivals on the West Coast,’ Sappio said.
In the final minutes of the 5,500-TEU APL Holland’s approach to the terminal on Sept. 29, Eagle Marine’s 12 gantry cranes began a coordinated shuffle of sorts along the pier. Four cranes previously working the larger APL Tennessee, moved into place alongside the APL Holland, while the cranes that were finishing the APL Korea took up position at the APL Tennessee. The larger APL Tennessee required three days of handling that week, while the APL Holland was scheduled to depart in 24 hours. The APL Holland is part of APL’s Pacific South 2 (PS2) service, which operates in a rotation of Oakland, Los Angeles, Manzanillo, Lazaro Cardenas, Los Angeles, Yokohama, Kaohsiung, Chiwan, Hong Kong and Shekou.
However, vessel-to-terminal connections don’t always operate like clockwork due to unforeseen changes to sailing schedules.
‘When one ship in the system is delayed it has an impact on the other ships and terminals in the string,’ said Jim Dwyer, vice president of global network operations for APL in Singapore. ‘We then have to figure out how to react to the circumstances.
‘What we’ll do is come up with a tactical reply to allow a ship to adjust,’ he added. ‘It’s common to do this particularly when the Asia terminals get behind by congestion and bad weather.’
Delays are also felt on the terminal side. ‘Late ships certainly hurt, whether that’s eight or 24 hours off schedule. You can quickly run up against an asset crunch,’ Cutler said. ‘The good thing is that we’re able to understand this and prepare ourselves to lessen the service and cost impacts. We can pull a lot of levers.’
During discharge, the APL Holland’s inbound containers waste little time on the docks. In June 2006, the Port of Los Angeles changed its free-time policy for how long containers can sit on the pier before demurrage is assessed on the shipper ‘ from five days to four days for imports, and from six days to five days for exports. Although this narrower window adds to the pressure, Eagle Marine executives prefer to minimize container dwell-time on the 292-acre terminal.
‘Our philosophy is that import containers stay on wheels; empties can be grounded; and exports may be grounded but grouped together for particular ships,’ Cutler said. ‘What you see in terms of acreage here is what you got. One parked container is room for three stacked containers on the ground.’
Containers designated for on-dock rail are out the gate and on a unit train in 24 to 36 hours, while others may be trucked to an offsite railhead within two days. Pick up by truck for local and regional traffic is generally completed within three to four days.
Intermodal connections in the Port of Los Angeles are especially complex since three large container terminals, including Eagle Marine, feed the same rail network. ‘We must coordinate between the terminals because we all have to share those tracks,’ Cutler said. ‘By 10 days out, we all know what the volumes are.’
Eagle Marine is able to move about 210 containers from ship to an intermodal unit train from 8 a.m. to 5 p.m. ‘We’ve devised a system so that when the container comes off the ship that within five minutes the trucker from the intermodal yard has picked it up and taken it to the train,’ Seeds said.
The terminal operator has enhanced its on-dock container tracking by installing radio-frequency identification tags on its chassis. ‘Data integrity is very important to us,’ Seeds said. ‘It affects our velocity.’
Eighty-five reader devices have been installed on light poles throughout the terminal, which work together to triangulate the location of any box within 10 feet.
‘We can recover a lost container quickly,’ Cutler said. ‘We’re able to track it back from when and how it left the ship.’
In the past five years, Eagle Marine has invested in optical character recognition systems to replace manual data entry and further perfect its system for managing grounded boxes.
‘We go through an extensive amount of analysis and testing,’ Cutler said. ‘What we don’t want to do is turn the system on and off to make fixes.’
Eagle Marine also includes dock labor in any terminal management upgrades. ‘We work closely with labor to figure out what will or won’t work in order to respect our contract,’ he said.
The week prior to the APL Holland’s arrival in Los Angeles, Eagle Marine’s terminal handled a record 21,000 container lifts, more than 15,000 gate moves and 7,000 rail lifts. ‘It’s a lot to concentrate on, and we have to plan so all this traffic doesn’t bump into each other,’ Cutler said.
For tactical reasons, Eagle Marine maintains a central meeting space within each of its terminal buildings, often referred to as the ‘war room.’ At Los Angeles, the room consists of a long table and chairs surrounded by wall-mounted flat screens containing computer generated operations data and streaming video of terminal activity. A core group of 15 to 20 people from the various terminal departments meets twice daily in this room to decide how best to apply resources to handle the day’s cargo flows. The group meets first at 10:30 a.m. to prepare for the evening’s workload, and again at 4 p.m. for the next morning.
The information generated from these meetings determines daily workloads, not just in terms of container volumes, but also in the amount of labor and trucks required to handle them. ‘We’re in competition everyday and every week with other terminals for labor,’ Cutler said. ‘People like to come here and we want to keep it that way.’
Cutler noted the war room meetings are sometimes heated, especially when a department perceives its resources are stretched. But in the end an agreement as to what’s needed must be reached. ‘This type of activity cannot be directed from an ivory tower,’ he said.
In August, APL began reporting the results of its internal accounting of schedule reliability to its customers for each of its four eastbound transpacific services, 99 sailings in all.
The information is released in APL’s quarterly customer newsletter, Global Horizons. From February through June 2010, all four services were 100 percent on time with the exception of two winter weather delays.
‘And in both of those cases, heavy March fog in Asia kept them from sailing on time,’ the line said. In January, four vessels missed their windows.
‘APL considers vessels on-time when they berth within four hours of scheduled arrival,’ the carrier said. ‘Most publicly available vessel reliability data uses a more forgiving same-day arrival benchmark. That makes it easier to be ‘on-time’ but weakens the reliability measure for shippers.’
In May 2010, American Shipper reported on the issue of schedule reliability, and the relative lack of industry-wide measurements available (‘Time for a rethink,’ pages 32-37 or at www.AmericanShipper.com/links).
Maersk Line recently touted its improving schedule reliability by citing data from Drewry Shipping Consultants. The Danish line said earlier this year it is seeking 95 percent on-time performance globally. According to Drewry, which tracks schedule reliability for 1,600 ships in 10 ports worldwide and defines ‘on-time’ as arriving on the scheduled day or one day early, Maersk achieved 75 percent reliability in the second quarter, far and away the best among lines it surveyed.
APL has a narrower definition for what constitutes on-time arrival. A ship may be due to arrive early in the morning on a specific day, but may actually arrive at 11:59 p.m. that same day and be considered on-time by most measures.
‘Our service is not perfect, but it is improving,’ said Ron Widdows, chief executive officer of NOL Group. ‘Through this quarterly reliability report, shippers will be able to measure the progress, and we welcome the scrutiny.’