Free flow helps several ports evacuate container yards more smoothly.
The top concern of international cargo shippers and maritime officials in the United States remains slow freight movement through container ports. The spring resolution of contract differences between longshoremen and management that bogged down work at West Coast ports for months was a welcome relief. But the underlying congestion issues plaguing major ports have not gone away.
Growing import volumes and bigger vessels unloading more containers at once, coupled with seasonal shortages of dockworkers, infrastructure not designed for big vessels, small cranes, outdated truck gate and yard designs, and peak season cargo surges have contributed to the congestion problems at several ports on both coasts.
Several port authorities are working with terminal operators and users to develop reforms aimed at smoothing waterside and landside operations. At the heart of those efforts is a realization that the port sector must change antiquated processes for unloading, storing, tracking and retrieving cargo for transfer between vessels, trucks and trains.
Perhaps the single greatest anachronism of the domestic container industry is a drayage model based on the random arrival of shuttle trucks at container yards looking to pick up a specific import box for a commercial customer. The result is a lot of time-consuming restacking of containers—while the driver waits—to find the one that can be dropped on the truck chassis for delivery to a distribution center or nearby rail yard.
A promising new concept being tried at several ports, however, is significantly increasing efficiency by segregating containers in large blocks for certain high-volume truck destinations. These “free-flow” programs—so called because they operate on the principle that trucks without specific assignments pull into line and simply take the next box off the top of the stack—have sprouted up at the ports of Los Angeles, Long Beach, New York and New Jersey, and Virginia.
Operational challenges and market realities have limited its adoption, so far. But a new Uber-like technology platform being rolled out in Los Angeles could facilitate truck transactions and make free flow the new standard for evacuating container yards.
Under the current system, terminals unload containers from arriving ships and put them into piles in the order they come off the ship. When trucks arrive and request a specific container, it has to be located and dug out of a stack that can be four or five containers high and six deep. Container-handling machines, like rubber-tired gantry cranes (RTG), move an average of three containers to deliver the correct one to a waiting truck. As a result, one RTG delivers an average of six to eight containers per hour.
Free flow, also referred to as “peel off,” is not a panacea for port productivity, but is a tool that can help shippers get their cargo faster and keep terminals more fluid. Using the free-flow process, a top-handler crane can deliver 25 to 30 containers per hour. Truckers like the system because less waiting boosts the number of trips, and money, they can make in a work day.
Free flow requires grouping large numbers of containers because terminals don’t have the resources and time to sort dozens of small piles. Terminals that offer free flow tend to do so for large shippers—such as Target, Home Depot and Walmart—with sufficient volume to gain the necessary efficiencies and justify setting aside valuable yard space for their containers. The shippers typically—but not always—have a dedicated shuttle-truck provider. Facilities in Los Angeles and Long Beach, for example, have a threshold of 80 to 100 containers for a common cargo owner. Motor carriers hired by the cargo owner are then able to pick up the nearest container from the pile and shuttle it to the destination warehouse.
Importers can typically evacuate their shipping boxes in a day compared to several days with traditional handling methods, according to freight executives.
Instead of entering the terminal with a pre-determined pick-up order, the driver accepts any container and then contacts the dispatch office with the container number to find out the matching customer and delivery instructions.
Maritime industry officials say free flow takes a great deal of coordination between shippers, carriers, terminal operators and truckers to make sure there is enough volume and proper execution. On the front-end, ocean carriers must share stow plans while a vessel is at sea, so ground facilities can set up their yard operations with the right amount of equipment and manpower to facilitate sorting. Before vessel arrival, motor carriers also need to provide the terminal with the list of containers they need segregated.
Some terminals have gone a step further by pooling containers for large motor carriers.
Total Transportation Services Inc. of Rancho Dominguez, Calif., one of the largest port trucking companies in Southern California, for example, asks several terminals at Los Angeles and Long Beach to consolidate its customers’ ocean boxes in a separate stack, when possible.
“It’s extremely efficient and improves the turn times dramatically,” Vic La Rosa, chief executive officer and co-founder, said.
The carrier generally gets at least one “peel-off” stack a week from one of the terminals, but overall volume moved through the program is still light, he said.
TTSI will take the boxes directly to customers with facilities located less than 20 miles from the port. When distribution centers are located further inland, the drayage company will relay boxes at a 17-acre depot operated by Pasha Stevedoring & Terminals on behalf of the Port of Los Angeles. The nearby facility can stage up to 500 containers, allowing drivers to shuttle back and forth to crowded marine terminals while others can utilize off-peak hours to grab containers for longer-distance hauls. TTSI leased 250 chassis to ensure containers are on wheels and ready to deliver in less than 48 hours.
Truck drivers can now get five to seven revenue-loads a day between terminals and the near-dock, peel-off facility, Port of Los Angeles Executive Director Gene Seroka said.
Free flow works best in conjunction with an off-dock holding yard, according to port industry professionals. Having a group of trucks cycle back and forth between a nearby container yard and the terminal greatly enhances productivity, because fewer are cramming into a congested port environment. The containers are stored on wheeled chassis for easy pick-up by a second group of truckers, who shuttle between the holding yard and warehouses further inland.
“That’s how we operate. We pull out of the terminal to our yard and then to a secondary location,” said Michael Johnson, an active member of the Harbor Trucking Association in Southern California, who didn’t want his company’s name used in this story.
“We need to see trucking companies play a larger role in taking cargo from terminals en mass, acting as a wholesaler and parceling it out to their customers as they need it, rather than having it jam up the terminals. They can take it to a third-party location or to their own yards if the beneficial cargo owner is not ready for delivery. The terminals are designed to be transit facilities, not warehouses,” John DiBernardo, an SSA Marine vice president in Long Beach, said.
Seattle-based SSA Marine, one of the largest private port operators in the United States, was an earlier pioneer of free flow years ago at its terminals along the West Coast.
The company generally prefers an importer have 100 to 200 containers to segregate into a block, but the minimum requirement depends on how much space is available. SSA’s terminal at the Port of Oakland, for example, is able to do free flow with quantities of less than 50 containers, DiBernardo said.
Most beneficial cargo owners and their preferred truckers without minimum quantities fought the idea of combining their ocean boxes in a stack with those of other shippers, because they couldn’t bear the thought of not controlling the cargo.
“They did not want another trucker to touch their container,” he said. “But now, as trucking companies get bigger they realize that it is more efficient” and are beginning to change their minds, especially as web-based applications for synchronizing cargo moves and creating a critical mass become available.
Earlier this year, APM Terminals in Port Newark, N.J., began operating a “hot stack”—or fast serve pile—for some large volume customers, according to truck and ocean carrier sources.
The combination of a “hot stack” and a special truck gate has allowed drivers to turn a container in 35 minutes, compared to more than 2.5 hours during normal times, Ken Kellaway, CEO of RoadOne Intermodal, said in an e-mail.
APM Terminals did a good job briefing participating motor carriers about the program and staying in frequent touch to address any issues, RoadOne’s director of operations for the Northeast, Paul Miller, added.
“If this set up could be done for some of the larger importers at the Port of New York/New Jersey I think it would help the rest of the import community and truckers, because it allows the remaining port staff to focus on other truckers while a large amount of containers flow separately from the regular process,” Miller said.
APM Terminals officials declined to discuss the new system, only saying that they always look for ways to improve customer service.
The Port of Virginia recently began segregating containers on a free-flow basis for some midsized shippers as well as for motor carriers, Chief Operations Officer Shawn Tibbetts said at the Virginia Maritime Association’s mid-May conference in Norfolk.
State-owned Virginia International Terminals, which operates the port’s terminals in Norfolk and Portsmouth, first explored the “peel-and-go” model during peak season last summer and experienced good results.
“We’re actively pursuing this because this is latent capacity that is underutilized now and allows us to use what we have in a smarter way,” Tibbetts said.
Block stowage—the practice at foreign ports of origin of consolidating containers for the same customers or inland rail destinations in the same bay to simplify and speed vessel unloading at the destination port—makes free flow easier, but is not necessary, according to Ed McCarthy, chief operating officer for CMA CGM (America).
The more overseas port stops to pick up cargo, the more difficult it becomes to get all a customer’s cargo in one block on the ship, McCarthy said. A single load-out for a customer in one port can be block-stowed, but trying to leave free space in the same section of the hold for their cargo in subsequent ports becomes a logistical challenge, especially in an era of alliances when a carrier’s cargo is often transported by a partner’s vessel.
CMA CGM, the third largest container line in the world, partners with terminals in Los Angeles, Oakland and New Jersey to facilitate free flow, McCarthy said.
One of the terminals TTSI works with is West Basin Container Terminal at the Port of Los Angeles. The 261-acre facility had a 30-box minimum when it began its peel-off program more than 18 months ago, but has since bumped it to 50 containers, although 90 to 100 containers is ideal to ensure a top handler—a heavy piece of machinery with an overhead telescopic boom used to lift and move containers—can stay busy during a shift, Mark Wheeler, vice president and general manager, said.
Free flow accounts for only about 5 percent of WBCT’s local cargo moves. About a dozen trucking companies participate, but only three take advantage of the program on a consistent basis. The infrequent users either don’t have enough volume or the administrative and technology resources to get container information from their customers and provide a list to the terminal in a timely fashion. Sometimes customers with priority shipments can’t wait for their containers and want the terminal to dig them out the traditional way, which affects availability for the free-flow pile.
Truckers usually show up in small waves of 10 to 15 to pick up cargo, go to their destination and come back, Wheeler said. Longer-distance deliveries operate best with a handoff, which means a drayage company needs to have a larger fleet and a yard with space to drop the chassis until the second pull can be made. Many motor carriers don’t have those capabilities.
All 13 marine terminals in Los Angeles and Long Beach do some form of free-flow, according to PierPass, the umbrella group that addresses multi-terminal issues such as congestion and collects fees for daytime truck moves to support night gates.
“Free flow is very promising, but it’s not having a material impact on our operations. It would be a great benefit if done universally, or at much higher rate,” TTSI’s La Rosa said.
The Uber Solution. The only way to get more penetration for free-flow activity on the docks is to aggregate the demand from smaller motor carriers and shippers, according to freight professionals. That’s where a new start-up technology firm called Cargomatic comes in.
Cargomatic, headquartered in Venice, Calif., is a digital platform that launched in early 2014 to match shippers with unused capacity in the short-haul truckload and less-than-truckload markets in Southern California—and now New York City. Think of it as an Uber for freight moving 150 miles or less.
Orders placed by shippers get blasted to drivers within a 20-mile radius, based on GPS coordinates.
In January, Cargomatic began working with the Los Angeles port authority on a modified version of its mobile app for the port trucking sector. Within weeks it launched the Cargomatic Free Flow program at West Basin Container Terminal.
Drivers are carefully examined to ensure they meet all required licensing, insurance and certifications, including compliance with the Uniform Intermodal Interchange and Facilities Access Agreement.
In addition to helping generate the necessary scale, the platform coordinates all the information between different parties who previously weren’t able to interact in an efficient manner.
Cargomatic gets the vessel offloading schedule from the terminal operator, passes it onto to the cargo owner or trucker, who then responds back with the containers on the vessel it wants. The tech provider subsequently informs the terminal to set aside the boxes in the Cargomatic Free Flow stack. Then the Cargomatic operating system alerts pre-vetted carriers on their smart phones, as well as the warehouses, when a container from a designated stack is available. Upon arrival, the optical character recognition system at the terminal gate identifies the truck by its license plate and chassis number and interfaces with the Cargomatic system, which advises the driver exactly where to pick up the container.
Cargomatic also automates the outbound dispatch. The driver doesn’t know where he or she is going when the container lands on the chassis, much like a taxi in line at the airport doesn’t know ahead of time its passenger or destination. The app allows the driver to take a picture of the container number, or enter it manually, and receive an auto-dispatch with the delivery location.
“No one has been the traffic coordinator in the past,” Cargomatic President and co-founder Brett Parker told American Shipper.
The app also facilitates street turns, something importers, exporters, motor carriers, chassis providers and terminals have long desired, but found difficult to achieve in many cases. Interchanging equipment in the field instead of the terminal eliminates a trip in each direction with an empty container, saving the shipper money, and reducing traffic congestion and pollution.
Once a shipment is delivered, the Cargomatic app presents the driver with a list of empty containers to choose from in their vicinity for the return trip to the port.
Drayage companies can use the technology to augment their own capacity. In such a scenario, they act as both a shipper and a carrier, Parker explained.
An independent owner, for example, can enter the containers into the Cargomatic system and have another trucker pick them up, as well as operate its own trucks against the free-flow pile. The trucker gets billed for the moves made by someone else and gets paid for hauls it makes on its own.
“We have carriers participating on both sides of the market place today,” Parker said.
Cargomatic sets the rate for drayage service booked through its platform.
So far, Cargomatic has not monetized the free-flow app. It is giving it away for free, because it wants everyone to do free flow. In the future, the company plans to add a small transaction fee, Parker said.
Shippers, however, can pay for Cargomatic to create dedicated capacity for their truck providers, something that Williams-Sonoma, among others, is doing to get its containers out of the terminal faster, he said.
Parker said his company also plans to automate the billing process for the free-flow equipment exchanges, as well as any per-diem fees assessed by terminals for late equipment returns. Currently, that responsibility falls on the shoulders of the trucker, who typically pays any penalty fees and then has to bill back the shipper.
Cargomatic can help because the system has visibility into who was at fault. When the container is dropped off at the distribution center, the driver notes it in the app, which creates a time stamp and starts the clock on the available free time.
Parker said the system is being tested and will be rolled out later this year.
WBCT now runs free-flow piles for large beneficial cargo owners and motor carriers, as well as a Cargomatic pile of consolidated shippers and truckers who promise to pick up their cargo within a short period.
The program has helped decrease turn-times by as much as 50 percent, according to Cargomatic.
Cargomatic simplifies the program, because WBCT doesn’t have to deal with multiple shippers and truckers, Wheeler said. Eventually, the goal is to have three separate zones within the Cargomatic stack for containers that need to be drayed less than 15 miles, between 15 and 40 miles, and more than 40 miles.
Cargomatic also is used by drivers picking up assigned containers in traditional truck-transfer zones.
“They’re still gaining ground,” Wheeler said. “They’re hitting our minimum, but there aren’t groundbreaking numbers yet.”
This article was published in the August 2015 issue of American Shipper.