“Every participant in the supply chain will have a role to play” in solving congestion issues, according to a new report from carrier group World Shipping Council.
The World Shipping Council is urging shipping industry stakeholders to stop pointing fingers at each other and take a more holistic approach to solving the issue of port congestion. In a new report from the ocean liner lobbying group, WSC says there are many causes of vessel congestion, but that the vessels themselves are not among them.
The report, “Some Observations on Port Congestion, Vessel Size and Vessel Sharing Agreements,” argues that the ever increasing size of containerships, and the subsequent need for vessel sharing agreements (VSAs) and alliances to efficiently utilize such ships, is the inevitable result of market forces such as high fuel costs, poor rates and intense competition. Further, the report argues that these changes are not new to the container industry, as ports and other stakeholders have long known vessels would only continue to grow in size, and may actually have benefits in decreasing port congestion.
“While larger ships do require operational adjustments from carriers and from port facilities, larger ships also handle commerce with more energy efficiency and with less environmental impact,” WSC said in the report. “The problems of port congestion cannot be accurately explained as simply a matter of the size of ships or vessel sharing alliances.”
The real culprits of congestion in U.S. ports, according to the report, are increased cargo volumes and a lack of operational efficiency in handling those volumes, both of which were exacerbated considerably by decreased port labor productivity on the West Coast in late 2014 and early 2015. These factors would exist regardless of the size of vessels bringing said cargo and had economic growth not diminished in recent years due to the global recession, the U.S. and other nations would have faced severe congestion problems regardless of the productivity issues experienced during negotiations between the International Longshore and Warehouse Union and employers represented by the Pacific Maritime Association.
“With economic growth comes an increased volume of containerized cargo. Whether 10,000 TEUs are unloaded into a port facility from one ship or two consecutive 5,000-TEU ships, the facility will need to be able to efficiently handle 10,000 TEUs,” said WSC.
“For example, the Los Angeles/Long Beach port complex in southern California handles roughly 12 million TEU of cargo per year. A five percent annual growth in trade volume equals more than a half-million more TEU each year that need to be handled, regardless of the size of the ships transporting them. Ports and transportation infrastructure need to be prepared for greater volumes and efficient ways to handle those volumes through ports regardless of ship size.
“It is also worth reflecting on how congested high-volume ports would be if all containers were transported via small vessels,” WSC added. “For example, consider how congested the Los Angeles/Long Beach port complex would be if all 12 million TEU of cargo transported through it were carried on 2,750 TEU ships.”
In the report, the World Shipping Council notes port congestion is a multi-faceted issue, and that the “justifiable” frustration is experienced not only by shippers, but by all segments of the industry from carriers and terminal operators to trucking and rail providers.
The truth of the matter, however, is that beneficial cargo owners end up bearing the brunt of the additional costs associated with port congestion in the form of inventory delays, lost sales and even direct charges from the service providers such as detention and demurrage fees.
Who then is responsible for solving the myriad issues presented by port congestion, according to the WSC? In a word: everyone.
“Port congestion can and does arise from multiple causes. Closer dialogue and joint problem solving is what is needed to address those issues, and solutions will not be found by pointing fingers. Every participant in the supply chain will have a role to play,” WSC said in the report.
“To handle the growing volume of containerized goods being shipped by importers and exporters around the world, coordinated planning and cooperation will be needed from ports, marine terminal operators, longshore labor, ocean carriers, railroads, road carriers, shippers, and the trustees of public infrastructure, just as it always has been needed.”
WSC: Larger vessels, alliances not to blame for port congestion
