The recent decision by ocean carriers to reduce vessel service at the Port of Oakland and send more vessels to the Ports of Los Angeles and Long Beach has negatively impacted U.S. agricultural exporters in the middle of the harvest, according to Peter Schneider, president TGS Logistics.
Schneider, who spoke to the Propeller Club of Northern California on September 28th said the move by the carriers had hit farmers in California’s San Joaquin Valley (SJV) especially hard since many must now truck their freight to the Southern California ports at a higher rate than when going to Oakland.
TGS, which is headquartered in Fresno, California, is a major trucking client to California growers.
Schneider said the ocean carriers’ decision makes the supply chain crisis in California worse because there is very little excess truck capacity to move product from the SJV to Southern California at this time: “We are in a crisis and it’s pretty ugly.”
The Port of Oakland reported on September 17th that import cargo volume edged up in August while the number of vessel services has been reduced. The Port said it “received the equivalent of 97,850 20-foot import containers in August. That was up 1.6% from August 2020.”
The Port “contrasted rising imports with a 40% drop in the number of container ships calling at Oakland … 68 ships arrived in August, compared to 113 a year ago.”
The Port attributed “declining vessel calls to ship diversions earlier this year. Several carriers rerouted vessels to avoid congestion at West Coast ports that resulted from surging import volume.”
The move by the ocean carriers from Oakland to Southern California is contributing to the 60 plus ships that are anchored waiting to berth and unload at the Ports of Los Angeles and Long Beach. This, by extension, contributes to delays in Asian imports reaching U.S. stores and undermines the efforts of California and other U.S. agricultural exporters to ship their products on the return voyages to customers in Asia before Christmas.
Bryan Brandes, maritime director, Port of Oakland told the Propeller Club that “most of the (shipping) lines have said services will begin to be restored in mid-October and November and into December but nothing is firmed yet.”
He noted that “MSC (Mediterranean Shipping Company) has announced a new first-port of-call service to Oakland starting in November and CMA will resume their first port of call on a weekly service in mid-October.”
Brandes urged shippers, forwarders and truckers to reach out to their ocean carrier representatives to urge them to restore service to Oakland: “the most important voice to the (shipping) line is the BCO (Beneficial Cargo Owner) and their representative.”
TGS’s Schneider elaborated on the economic losses to agricultural exporters and truckers that the shift away from the Port of Oakland has caused.
He said TGS has operated 120-150 trucks per day going to the Port of Oakland and about 25 trucks per day to the Ports of Los Angeles and Long Beach originating from the SJV. These shipments include: dry and refrigerated cargoes and cargo from Northern Nevada: “I should be running 20% to 30% more cargo into the Port of Oakland than I am (today) because many of you cannot get bookings out of the Port of Oakland.”
Schneider said that in cooperation with the Agriculture Transportation Coalition (AGTC), he will be sending out the email addresses of top ocean carriers executives in Europe, Asia and the United States for exporters, importers, forwarders and truckers to contact expressing their concerns about the move away from Oakland.
The situation requires urgent action on the part of shippers and freight forwarders:
“I’ll just say this first. It’s a crisis and everything we can do to get the shipping lines (including) yelling and screaming should be done to get them to get their services back.”
He said shippers need to reach beyond their sales representatives: “It’s got to go higher up. I think it’s imperative now to pound the drum that we’ve got to get the services back.”
The situation is especially urgent because of the current harvest of almonds, pistachios and walnuts that need to be delivered to customers in Asia before Christmas:
“The almonds get harvested in August and get shipped in September. The pistachios are harvested in September and shipped in October. Walnuts get harvested September/October and get shipped in November/December.”
Schneider said that many of his customers have asked him to truck more containers to the Southern California ports but he has refused because he already has customers in Southern California and many of his drivers are owner operators who work within a fixed territory. Thus, they are reluctant to switch to Southern California as opposed to Northern California and the Port of Oakland.
Schneider said he has had to raise his freight rates by 30% in 2021 so as to compensate his drivers and retain them.
At the same time, trucking a container to Southern California from the Fresno area, where TGS is headquartered, is $300-$400 more expensive than trucking from Fresno to Oakland.
Schneider said that some of his customers that ship to South-East Asia tell him that they are going to cut their export shipments by 30% because they know they cannot get their product delivered to Asian customers before Christmas. Other shippers are getting out of exports and “don’t know what to do because they can’t necessarily sell their product domestically for the same price” as they were making on exports:
“What I’m getting at is what the steamship lines are doing is taking all the revenue they can get and putting all the ships that they can get into the LA/Long Beach market and going back to Asia empty and doing it again and it is really hurting our area of Northern California as well as Seattle/Tacoma.”
Susan Ransom, a client relations manager for Stevedoring Services of America, which operates the Port of Oakland’s largest terminal Oakland International Container Terminal said that thanks to efforts by the Pacific Maritime Association (PMA) and International Longshore and Warehouse Union (ILWU) Local 10, there has been an increase in the workforce and productivity at the Port of Oakland with more trained longshore workers operating cargo-handling equipment in 2021.
Trent Willis, ILWU Local 10 president agreed with Ransom and explained that the cooperation between the ILWU and the PMA has resulted in the following:
After this major effort to increase the workforce and productivity at the Port of Oakland, Willis said that he is mystified to find that the ocean carriers responded “by going away. I don’t understand it.”