Shippers are feeling squeezed by port capacity problems and unreliable liner service.
Congestion at key U.S. ports is partly a byproduct of bigger vessels, but the carriers that operate those ships are exacerbating the situation with poor service and an indifferent approach towards tackling problems experienced by customers, according to a supervisor for a large chemical shipper.
Port productivity has been undermined for more than a year by shortages or imbalances of chassis, truck drivers and dock labor that have made it difficult for marine terminals to process rising volumes of cargo. Ships are waiting at anchor for a berth or skipping sailings for alternative ports. The resulting delays in receiving or delivering goods, as well as hikes in transport costs have greatly frustrated importers and exporters.
The situation has been made worse by the decline in service and schedule reliability as shipping lines have consolidated operations to save money, Elton Poisler, international logistics manager for DuPont, said last month at the National Industrial Transportation League’s annual conference in Fort Lauderdale, Fla.
“We’re having to manage carrier performance; tell them when they’re failing on their commitments for on-time delivery,” he said during a panel discussion on port congestion.
Container lines shouldn’t define reliability simply by water-transit time, but by the speed in which a product makes it from a manufacturer’s door to a customer’s warehouse, he insisted.
“When everyone is sharing services and sharing vessels and gloating about the fact that they have 76 percent on-time delivery on a port-to-port basis, I wouldn’t think that’s something you want to go out and brag about,” Poisler said, echoing complaints of many shippers in recent years.
Slow steaming is already factored into lead times and isn’t counted against reliability, he clarified.
Tardy vessels are only one part of the equation for shippers, who also face limited equipment availability, declining railroad reliability and truck capacity issues, he explained.
When shipments are measured end-to-end, DuPont’s on-time delivery metric is about 58 percent, the logistics chief. That means “there is a 50/50 chance of getting the shipment to the customer” when promised, he said.
DuPont moves about 170,000 TEUs a year and more than 65 percent of that activity involves exports from the United States.
Poisler complained that carriers don’t seem to pay attention to many key metrics that provide insight into supply chain efficiency and how to make improvements.
The Wilmington, Del.-based chemical producer has reacted to port congestion by re-examining its supply chain practices and business continuity plans to make sure that commitments made to internal and external customers are not part of the problem, Poisler said. DuPont has made it a point to become more reliable in forecasting the timing of deliveries and the number of expected shipments so that transportation providers can better prepare how to deploy their assets.
“That has helped us mitigate a good percentage of the challenges we face,” he said.
But shipping lines need to take the same crisis-management approach to address issues affecting cargo owners, Poisler said.
Ocean carriers are receptive to DuPont’s feedback on correcting performance deficiencies, he said, but ideally they would have the wherewithal to self-correct without so much direction.
One of the disappointing features of the container industry is the sub-par technology used to keep customers abreast of their shipment status, he added.
Service and back-office capability become more apparent when capacity is tight, according to the DuPont executive.
“We haven’t seen carrier technology improve over time,” so DuPont is making greater use of third-party logistics providers and non-vessel-operating common carriers to get visibility of ocean shipments, Poisler said. “Technology is critical to getting through these service issues. Having visibility allows one to be proactive and address bottlenecks with equipment, vessel schedules and capacity.”
Shippers, he said in response to a question, are willing to pay more for service. “What we haven’t seen is that service demonstrated on a consistent basis, so there’s really not much to compare it to. And how do you assign a higher cost when you really haven’t seen that demonstrated performance?”
Whether to invest in improved capabilities or capture needed revenues first, Poisler acknowledged, is a chicken-and-egg situation for carriers. Good communication and engagement with shippers can help make the decision easier, he added.
Poor ocean service compounds port congestion, DuPont manager says
