The BOC Blast 198 – Alliances cause US West Coast port delays

Alliances cause US West Coast port delays

Bill Mongelluzzo, Senior Editor | May 09, 2017 6:06PM EDT,


The vessel rotations introduced last month by the new and enhanced global shipping alliances have generated terminal congestion, longer truck turn times, delays in spotting and releasing intermodal trains at on-dock rail facilities, and chassis dislocations at West Coast ports.

Beneficial cargo owners (BCOs) say they have yet to experience disruptions in vessel schedules or in taking delivery of their shipments at West Coast ports, but due to events unfolding in Asia, they are preparing for possible delays in the coming weeks. “I haven’t seen anything yet, but I’m starting to hear comments about Asian issues,” said Steve Hughes, vice president, supplier development government affairs and logistics at Centric Parts.

Indeed, several carriers reportedly notified their customers that in addition to congestion problems at Shanghai’s Yangshan Port, congestion is spreading to Qingdao and Ningbo. Weather issues, including dense fog in Shanghai in mid-April, problems Asian ports are experiencing in adjusting  to new vessel rotations from the restructured alliances  that took  effect on April 1 and a move by exporters to get ahead of  previously-announced rate increases May 1 in the Asia-Europe trades have reportedly overwhelmed some ports.

BCOs are also on alert for possible delays or dislocations at East Coast ports in the coming weeks. With longer sailing times to the  East Coast of 22 days or greater, the first vessel arrivals under the new alliances are expected  to begin next week.

West Coast terminal operators and port managers say the initial problems that surfaced in the past week or so should be corrected in the coming weeks as terminal operators adjust to the new vessel rotations, increased container volumes and in some cases the bigger ships that carriers have introduced in line with the restructured alliances. “We have been through this rodeo before,” said Michael DiBernardo, deputy executive director marketing and customer relations at the Port of Los Angeles. DiBernardo said any major changes in ocean services cause temporary disruptions. “It should smooth out in the coming weeks,” he said.

Carriers on April 1 restructured their vessel-sharing alliances from four to three. The memberships in the Ocean Alliance and THE Alliance are markedly different from the previous alliance arrangements. The 2M Alliance of Maersk Line and Mediterranean Shipping Co. remained the same, except that the 2M added a slot-sharing arrangement with Hyundai Merchant Marine.

While advertised as a shotgun start, the phase-in period actually lasted several weeks, so the full operational impact of the new alliances is just now playing out. “It hit in the last week of April,” said Ed DeNike, COO at SSA Marine, which has container terminals in the Northwest Seaport Alliance of Seattle and Tacoma, Oakland and Long Beach.

Some terminals experienced only minimal changes, such as marginal increases in vessel sizes or the loss of a vessel string. In some cases, terminals reported losing a vessel string but making up the difference with an upgrading of vessel sizes in the remaining strings.

At SSA’s Oakland International Container Terminal, for example, gate moves during the day increased to about 5,000, from 4,500, and to 1,700 at night from 1,200 before. SSA’s Terminal 18 in Seattle actually got a large bump in volume as it doubled its gate moves to about 2,500, but the facility has plenty of capacity to handle the increased volume, DeNike said. SSA operates three terminals in Long  Beach, but any loss of a vessel service was negated by the upsizing of vessels in other services, he said.

Port of Oakland spokesman Michael Zampa said Tuesday the Everport terminal also experienced an increase in cargo volume due to  alliance changes, but generally truck turn times in the harbor are normal.

The same is true in Southern California, where truck turn times in April were faster than they were earlier in the year, according to the Harbor Trucking Association, which tracks turn times at all of the port’s 13 container terminals. The average truck visit times in January and February were 88 minutes. They improved in March to 76 minutes, and in April the times averaged 80 minutes. However, since the alliance changes did not begin to register until the final week of April, the May numbers may tell a different story.

The Northwest Seaport Alliance of Seattle and Tacoma are experiencing extra work as they reposition containers from facilities where the former alliance vessels had  called while at the same time taking on  containers from the new alliance rotations, said spokeswoman Tara Mattina.

The biggest impact of the new alliances is unfolding in Los Angeles-Long Beach. In addition to terminal-hopping and vessel upgrades, the port complex is adjusting to repercussions of the alliances changes on rail operations and chassis availability. Also, a massive bridge replacement project is disrupting truck traffic on Terminal Island.

Pier T, the former Hanjin Shipping terminal in Long Beach, was hit with a double whammy in recent months. Its volume dropped to about 12,000 container moves a week with the bankruptcy of Hanjin on Aug. 31, and then in late April jumped to more than 20,000 container moves a week when a 2M service by Maersk Line MSC moved to the Pier T facility from Los Angeles.

BNSF Railway and Union Pacific railroad have also been affected by the alliance shifts because intermodal contracts they have with individual shipping lines require the railroads to follow the carriers to the new terminals where their vessels are now calling. Alan McCorkle, vice president of Yusen Terminals in Los Angeles, said the spotting of trains and therefore departure of the trains are being delayed. “It’s not the volume, but the timing,” he said.

UP spokesman Justin Jacobs said changes in vessel schedules and increasing or decreasing container volumes are taking place in Southern California. “These changes impact the operations of all stakeholders, including rail. Operations will improve as stakeholders adjust to these changes,” he said Tuesday.

The neutral chassis operation known as the pool of pools that was launched on March 1, 2015, must also adjust to the shifting alliances, with surplus chassis emerging at some terminals and  deficits at others. “This will happen if a terminal had low volume prior to the alliance change and  all of a sudden they get a bump in volume.” DiBernardo said. Chassis owners must now reposition bare chassis to where they are needed, he said.

The $1.5 billion Gerald Desmond Bridge replacementproject in  Long  Beach, which is scheduled  for completion next year, has reached a major stage in its construction. The closing of some on and off-ramps has shifted a greater volume of trucks to other ramps, congesting the working ramps and local roadways and reducing the space available for truck queueing. The greatest impact is being felt on Terminal Island, which just happens to house the APM Terminal, the largest in Los Angeles, and Pier T, the largest terminal in Long Beach.

There is still some concern on both coasts, however, that things could get worse before they get better due to strong export volumes in Asia and logistics developments that could impact vessel departures. According to Drewry’s latest Container Intelligence Weekly, China’s top 10 ports collectively experienced a 6 percent increase in container volume in the first quarter of the year. Drewry stated the ports with the largest gains — Qingdao, Shanghai and Ningbo — are experiencing the worst congestion.

KARACHI: Goods carriers went on strike on Monday in protest against the restriction imposed by the Sindh High Court on the movement of heavy vehicles within the city’s jurisdiction.

The transporters said the restriction would result in extra cost because their vehicles would have to cover long distances to reach their destinations and no business could be carried out with losses.

Talking to Dawn, Transporters of Goods Association-KPT president Anwar Soomro said the decision to go on strike had been taken by transporters associations across the country under the umbrella of the United Alliance of Transporters.

He warned that if the government failed to take notice and remove their grievances, the goods carriers would observe a countrywide strike from Tuesday.

He said that although the Supreme Court had allowed the movement of heavy vehicles of city goods carriers, the SHC stopped them from plying within the city.

About 7,000 to 8,000 containers and goods carriers with raw material, imported food and other items daily travel from the Karachi Port to Port Qasim, Landhi and Korangi industrial areas — a distance of about 35km.

Mr Soomro claimed that because of the restriction the heavy vehicles now reached these areas after covering a long distance of around 200km through a new route. He said heavy vehicles would first have to go to Hub Chowki towards Northern Bypass and then to Sohrab Goth from where a very narrow link road near Port Qasim would take them to the industrial areas of Landhi and Korangi.

A stevedore working at the Karachi Port said that unfortunately the movement of trucks within port areas also had been stopped, which meant that bulk cargo unloaded from ships could not be moved to shed for temporary storage for onward movement upcountry.

Similarly, the movement of containers from the Karachi Port to the industrial areas of PQA, Landhi and Korangi was also stopped and it is expected that within days there would be congestion at the port.

The worst part of the entire scenario, he said, was that a large quantity of imported food items like cereals and other goods mostly consumed during Ramazan were stored in these industrial areas for onward movement upcountry.

Leading exporter Mohammad Jawed Bilwani said the goods carriers’ strike would aggravate the situation because exports were already falling rapidly and the country had witnessed a record trade deficit.

He claimed that on average exports would suffer to the tune of Rs6 billion daily at a time when home remittances also declined. Mr Bilwani urged the authorities to lift the restriction on the movement of heavy vehicles within the city’s jurisdiction.

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