I attended a CBFANC sponsored town-hall meeting yesterday to discuss the ongoing terminal congestion issues at the port of Oakland. Present at the meeting were a number of brokers, forwarders, truckers, Elizabeth Martin (Senior Account Manager from APL), and Damon Gomes (Business Relations Manager for Ports America). The representative for SSA terminal was invited, but was unavailable to attend.
I had two goals for this meeting:
1.) Get a better understanding of the causes of the port congestion.
2.) Find out what solutions are available.
Here is a summary of what I learned.
Chassis shortages and chassis repositioning delays play a role in slowing down turn times in the terminal. There are three main chassis providers for the terminals in Oakland. They are responsible for getting chassis positioned correctly at various terminals. The terminals will provide advanced notice to the chassis providers to let them know how many chassis they need in advance of a vessel arrival. Unfortunately, the chassis are not always being provided in sufficient quantities. In other circumstances, the chassis that are available in the terminal are not necessarily the right ones to be used with the container.
One trucker mentioned that SSA on that very day did not have enough chassis available. This ended up causing truckers to wait at the terminal for chassis to become available, leading to further congestion. The irony here is that one of the reasons for chassis shortages is that congestion prevents truckers from returning the chassis. Damon Gomes mentioned that Ports America has tried to proactively address this situation by creating a lane purely for the pickup and return of chassis.
One possible solution that could assist with the chassis shortages would be moving to a gray chassis pool. Under such circumstances, any chassis could be used with any container, regardless of the carrier. The challenge to this is how to divvy up responsibility for maintenance of chassis, as well as how to deal with the one or two carriers that have still not fully divested from the chassis game.
We discussed how other countries handled their chassis issues. It was noted that in some countries, the truckers managed their own chassis rather than 3rd party chassis providers. This concept was thought to be unworkable in the port of Oakland. The cost of maintaining trucks (especially with the new CARB requirements) was considered already a burden on the trucking community. Impact Transportation estimated that if truckers maintained their own chassis, the cost they would pass down to the import community for a chassis fee would be upwards of $100 a day. That is significantly more than the $15 to $25 a day most chassis providers are currently charging. The main reason for this discrepancy in cost seems related to the cost of maintaining the chassis and economies of scale. The large chassis providers are able to buy and maintain the chassis fleets at far lower cost than truckers. While I am aware that there are truckers who do have their own chassis, I am unsure if it is a long term viable model for other truckers in the Oakland market.
Consolidation of Terminals
We discussed the how we ended up with the four main terminals we now have in Oakland. Most everyone is aware the SSA absorbed APL terminal and Hanjin’s TTI terminal back in July 2013. Ports America also added services in November 2013. In so doing, SSA and Ports America have become “super terminals” managing far more containers than any one Oakland terminal previously handled. The consolidation of terminals is a major contributing factor to the congestion. While the total acreage used for all the terminals remains the same, the bottleneck is found in the terminal operations. My understanding is that the terminals are now serving the same, if not slightly more containers than before, with less equipment, in particular, less transtainers. Furthermore, in previous years when a number of carriers had their own terminals, there were more wheeled operations where containers came off vessels and were immediately placed on chassis.
The shipping community is very much aware that in the past two months, Ports America, seems to have had the greatest congestion issues. I do want to say that Damon Gomes was very forthright about how Ports America is trying to tackle this problem.
1.) They currently are operating six transtainers and have four more transtainers on the way. This should significantly help relieve the turn times at Ports America.
2.) They are working to find ways to eliminate or reduce the “5D” situation where containers are placed in areas that are closed off and unavailable to drivers. One possible solution would be to rotate sections of the terminal that are placed on “5D” status.
3.) Ports America has opened Saturday gates in previous weeks and even opened during Presidents’ Day. One issue that was brought up was that even during the Saturday gates, the turn times were still slow. It was explained that this was due to less experienced longshoremen working the Saturday gates.
4.) Ports America has also approached Customs about allowing them to open up Monday, Tuesday and Wednesday night gates in March. These night gates would allow truckers to come and grab containers between 6pm and 3am. They are still waiting for approval from Customs as any night gate will require Customs officers to be working the gate during those hours. Ports America did indicate that they would do this at their own expense in the month of March, if they can get Customs approval. They are also confident that night gates would not run into the same slow turn times that the Saturday gates have experienced.
I was extremely encouraged by the suggestions offered by Ports America, despite their recent problems with congestion.
Permanent Night Gate: The Solution?
We spent a good part of the time talking about what seems to be the one realistic long term solution to the congestion issue, a permanent Night gate.
Would it help relieve congestion? There seemed to be consensus that a Night Gate could greatly help relieve congestion. Truckers would not be closed out and turned away from the terminals in the mid afternoon. The extra time (expected to be from 6pm to 3am) allotted to pick up containers would allow truckers to spread out their pickup times.
The main concern was that a Night Gate program would require buy-in from the shipping community. Importers and exporters would have to not only be willing to accommodate with their shipping and receiving schedules, they would have to be willing to pay a possible additional cost. A Night Gate program would likely be modeled after the Los Angeles – Long Beach Pier Pass program. Those in Southern California are currently paying $66.50 per 20’ container and $133 per 40’ container for picking up containers during the day. Containers picked up during Night Gate hours would not be subject to this fee. Whether the cost of a Night Gate program in Oakland would be more or less must still be evaluated. However importers and exporters are already paying additional fees under current conditions:
• Truckers charging for waiting time
• Additional chassis fee assessed for containers requiring more time to delivery and return
• Detention fees for containers that are returned late
I am not even taking into account the business cost of containers not being delivered on time. I expect to see the shipping community strongly supporting a permanent Night Gate program. Please let your voices be heard.
ILWU Labor Contract Negotiations
While I came away from the meeting feeling optimistic that the parties involved at the port of Oakland, in particular Ports America, are working on solutions, the shadow hanging over the head of our discussions was the forthcoming contract negotiations between the ILWU and the PMA. Everyone is aware that the longshoremen’s contract is up at the end of June. We are also aware that the union is extremely strong and likely will find opportunities to show their strength during the negotiation process. These demonstrations of strength often lead to slow downs at the terminals.
I would therefore say that it is imperative that the shipping community work hard in the coming months to try to push for and enact the Night Gate solution.
We are living in the reality of consolidated terminal management at the port of Oakland. These next few months are important to help solve the current congestion problem and help avert potential further congestion leading up to the ILWU contract renewal.