Following an October 13th White House meeting with President Biden on port congestion, Port of Los Angeles Executive Director Gene Seroka provided assurances that terminals at the Port of Los Angeles would utilize 24/7 operations to reduce congestion.
Seroka was joined at the Port’s monthly media briefing on October 14th, by John Porcari, U.S. Port Envoy to the Biden-Harris Administration Supply Chain Disruptions Task Force.
Porcari: Federal Government has no authority
Porcari was asked by a reporter about what steps the federal government could take to enforce 24 hour 7 days a week system for cargo-handling at ports.
Porcari replied “This is a private sector system, essentially and the federal government role is largely brokering discussions and encouraging cooperation between different parts of the system.”
Porcari said that he would be engaged in meetings with maritime stakeholders “on 24/7 operations including the barriers but this is not like flipping a light switch.”
At the briefing, Seroka was asked by reporters to provide a timetable for container terminals to adopt 24/7 operations. He responded that each terminal would be developing its own plans to meet 24/7 goals.
Port has record September 2021
Seroka noted that September 2021 was the best September volume-wise for the Port of Los Angeles. The Port’s container volume was 898,941 twenty-foot unit containers (TEUs) processed which is up 1.7% from September 2020.
The Port has been averaging 900,000 TEUs per month for the last fourteen months.
“The duration of this cargo run is quite remarkable … We have averaged 17 ships at berth daily in the month of September: that’s 70% higher than in pre-pandemic days.”
Imports remained strong at a projected 466,000 TEUs for September, 1.2% down from September 2020 imports.
U.S. exports continued to slide, he said, with projected loaded exports at 75,802 TEUs, down from 130,397 in September 2020 for a decline of 41.9%
Seroka noted “We haven’t seen this low an export number since 2002.”
On the positive side, Seroka noted that “the push system to get cargo out to customers is starting to gain traction.”
He noted “Our rail dwell time from on dock product is down to 4.4 days from a high of 13.5 days. We’ve cut the backlog of rail containers by two thirds in the last 60 days … some great work happening here by the Burlington Northern Santa Fe railroad and the Union Pacific railroad.”
SSA says terminals not to blame
The view that 24/7 operations at container terminals will dramatically reduce congestion is not universally accepted.
Ed DeNike, president of SSA containers, operates 8 terminals on the West Coast. SSA represents 25% of the West Coast ports’ man-hours and SSA operates three terminals in Southern California including at the Port of Long Beach.
DeNike told the International Propeller Club convention on October 13th that container terminals have been blamed for congestion that they have no control over and did not cause.
Normally SSA moves 1000 to 2000 containers every night to off-dock facilities that are open 24 hours per day 7 days per week. There is no extra cost to pick up these containers at the off-dock container yards.
DeNike said: “What we are seeing is that the containers are not being picked up at our off-dock facilities or at our terminals at the waterfront.”
Saturday service and 24-hour gates don’t work
On the issue of more night hours and 24-hour service at terminals: “We don’t believe that more gate hours are going to solve the problem.”
DeNike said that when SSA offers the late-night gates and tried Saturday service to help relieve congestion: “The truckers are not using the late nights. When we offer Saturday service … at our expense, and we’ve (been) open on Saturdays at various ports … we’ve gotten very little support from the trucking and BCOs (beneficial cargo owners) …. It’s an absolute waste of money … Our rates that we get from the carriers cover Monday through Friday.”
A similar problem exists at the Port of Seattle, he said.
BNSF and UP Capacity Shortfall
DeNike said the congestion problem “started several months ago by the fact that the railroads (Burlington Northern Santa Fe and Union Pacific) simply could not keep up with the volume that was coming through the West Coast.” DeNike heard similar problems with rail service were happening at other terminals with the result:
“The containers that were destined to go intermodal were piling up in the thousands. They were taking up room and creating havoc among all of us … The railroads have done a little better recently, but it’ still an issue.”
Local Import Containers Not Being Expeditiously Picked Up
In addition, DeNike said, import containers destined for Southern California warehouses are not being picked up:
“Those are the imports that are going local. They are not being picked up. Dwell times on the terminals are 3-4 times what it would normally be. We’ve had big shippers keep containers on our docks for 30-40 days, paying demurrage which is quite expensive but they’re still keeping them (the containers) on the docks.”
As a result of warehouses not processing containers, the chassis are delayed with containers outside warehouses and not being returned to terminals so that import containers cannot be placed on the returned chassis and trucked out of the terminals. This adds to the congestion:
“SSA has 8,000 chassis that we use and own to help our terminals move containers using dray operations. We’ve lost 4,000 chassis. When I say lost…they’re not coming back (because they are delayed at warehouses). As a result, we’re not able to dray off what we would normally dray off …. our on-dock terminals are more congested because we can’t get the imports off the dock.”
U.S. Railroad Intermodal Moves Are Down in 2021
Complicating the port congestion problem is that U.S. railroads nationally were moving less container or intermodal shipments in September 2021 than in September 2020, according to the Association of American Railroads (AAR):
“U.S. railroads also originated 1,328,527 containers and trailers in September 2021, down 6.7 percent, or 95,317 units, from the same month last year.”
AAR Senior Vice President John T. Gray noted “Rail intermodal volume is clearly not what it has been and could be … Keeping intermodal terminals functioning smoothly and at full capacity depends on consistent freight outflows to make room for new freight inflows. Unfortunately, due to limited availability of downstream truck and warehouse capacity, that’s not happening right now with predictable impacts on rail intermodal volume. There is no single solution to this problem but railroads are bringing intermodal yard capacity back online to increase storage availability as well as working with customers and truckers to accelerate container pickup among other efforts. At the same time, railroads continue to see improvements in carload business with a variety of industrial goods, including steel, paper, crushed stone and chemicals showing continued progress in September.”