Month: January 2014

Reflections on the State of the Port (Oakland)

I was at the State of the Port dinner last night. One of the speakers was the Executive Port Director for the port of Oakland. He got grilled by the shipping community during the QA session. Frustrations really boiled over. In fact, I’m surprised he didn’t get hammered even more.
On the surface, the problem is massive congestion. The congestion affects shipping in two ways:
1.) Container availability. With too many containers in limited space, containers are often put in closed off areas. These containers are often left in closed off areas for days on end. In some terminals that require an appointment to pick up a container, the terminals don’t have enough pickup dates readily available.
2.) Drivers can wait in line first thing in the morning to pick up a container. They may get out of the terminal by mid morning. If they are lucky, they are able to return to the terminals in the early afternoon to pick up another container. They then have to wait in line. However some of the terminals are closing the drivers out early/mid afternoon (3pm or earlier in some cases). Despite waiting in line, truckers may not be able to pick up a second container if they get closed out. This type of congestion is unworkable for most truckers. Their livelihood depends on making as many truck moves as possible. The shipping community cannot find enough truckers to do the work that is available. It’s not that the truckers don’t want to do the moves, they just can’t get out of the terminals fast enough.
What I was hoping Chris Lytle would do last night was provide a serious framework for solving these problems. Unfortunately, he barely touched on the problems during his speech. I think that was partly why the shipping community really went after him during the Q&A session. What we need is an open and honest conversation with the entire shipping community. The port of Oakland is not experiencing a huge sudden huge influx of surplus containers. The port of Oakland has handled this volume before and should be able to handle it now.
Keep in mind that I am not blaming Chris Lytle for the problems. He came on board last summer and walked right into a hornet’s nest. My own viewpoint is that it ultimately starts with the steamship lines. They are doing everything they can to cut costs. These measures have put a real damper on productivity at the ports:
  • Maersk, APL, and Hanjin (three big carriers) have in the past few years stopped using their own terminals and merged in with 3rd party terminals in Oakland. Chris did acknowledge this as a big part of the problem yesterday. Consolidation of terminals is a key contributor to congestion at the terminals.
  • From talking to one of the terminal managers, the carriers are really reluctant to spend extra money on more longshoremen crews to work the ships. I don’t know if this ultimately falls on the terminals or the carriers. I do know that in the case of Evergreen, they do have some power to decide on how many crews to hire. I don’t know if more longshoremen would lead to great efficiency.
  • I learned the other day that the recent congestion at Ben E Nutter terminal was partly due to a broken transtainer. The transtainer had been broken since December. One month later, it is still broken. The terminal only had two transtainers to begin with. One is obviously not enough. The public hasn’t received any message of explanation as to why it is taking so long to get it fixed.
I have heard others in the shipping community say that the carriers really don’t mind if containers sit at ports longer. They feel that storage/demurrage charges are revenue generators for the carriers. I’m not sure if I completely agree with the argument, but I can see why members of the shipping community would feel this way.
The reality is that in the past five/six years carriers have really struggled with their profitability. What we are seeing at the port of Oakland is an example of legacy of the cost cutting measures. If service is measured by transit time and reliability, it is obvious to me that the quality of the service that carriers provide has seriously degraded.
Is there a light at the end of the tunnel? I am not sure. Chris Lytle mentioned that the port of Oakland should consider creating a Pier Pass system like the one in Los Angeles and Long Beach. The Pier Pass system would allow for before and after hours pickups. It would extend terminal operation hours from early morning to very late into the night. The cost of this system, if designed in the same way as that of Los Angeles and Long Beach, would be placed directly on the shipping community. I do believe most in the shipping community, after having spent the past half year complaining about service level at the port of Oakland, will accept this added cost.
Another related suggestion floated out there was adding a weekend (Saturday) service. Who would directly bear the cost of this service is a bit more difficult to figure out. If it requires the carriers to pay directly for more longshoremen, I can see the carriers being stingy. The track record of the carriers the past few years is that they are willing to sacrifice service, the importing community be damned.
Another x-factor in the whole situation is the ILUW (longshormen’s union). With the contract expiring on June 30th, we can be sure to expect games to be played by both sides (terminal and union) in the months leading up to the renewal.

Port of Oakland – Update on Ben E. Nutter Terminal

I’ve written and spoken with the shipping community extensively the past few months about the troubles at the port of Oakland. One issue I mentioned recently was how congestion had spread to other terminals in Oakland, beyond just SSA terminal. I learned today that the reason for congestion at Ben E. Nutter terminal is that one of their two transtainers has been broken since December. The terminal has been operating on only one transtainer for over one month. This is the reason why many containers have remained decked and unavailable for days after vessel arrival. It is also the reason why we have been unable to request wheeled containers during this time. This terminal primarily serves Evergreen vessels. Speaking with Evergreen representatives today, I learned that they don’t expect the broken transtainer to be repaired until sometime in February. Until then, we can continue to expect delays in container availability.

-Jimmy Ting

Great World Logistics (GWL)
Great World Customs Service
Great World Express

ALL Port of Oakland Terminals Continue to Operate Slowly

I’ve mentioned over the last half year about the problems at SSA terminal in Oakland. However it is important to note that SSA is not alone when it comes to causing problems for the importing community. Over the past three weeks, we have seen containers at Ports of America take over a week after arrival to become available for a pickup appointment. We recently experienced the same situation with another container at Ben E. Nutter Terminal. From talking to truckers, these problems are widespread across all the Oakland terminals.

Truckers have also advised us that they are being closed out of terminals by early/mid afternoon each day. One local drayage company, Devine Intermodal, discusses this issue in detail on their news site. If truckers are not able to pick up containers in the mid-afternoon, they will not be able to deliver the required number of containers necessary to make a living wage.

At the heart of the matter of terminal efficiency apparently is $$$.

  • Terminal operators and the steamship lines that operate them want to save money by limiting the number of longshoremen used each day as well as the amount of overtime paid.
  • Longshoremen seem to be flexing their muscles and showing their ability to affect terminal efficiency in recent weeks in the slow buildup to their contract renewal negotiations. Note that the ILWU current contract is set to expire on June 30, 2014.

The end result of these issues is that importers will have to face the following:

  • An increase in the cost of trucking if drivers are not able to deliver their usual number of loads.
  • Delays in receiving containers as the terminals remain congested.

What is unfortunate is that we do not see a solution in the near future. As the steamship lines continue to lose money in recent years, we have seen them take a number of actions to save money:

  • Slow steaming to reduce fuel cost.
  • Pushing the responsibility for chassis rental directly onto the backs of importers.
  • Limiting the amount of labor used at terminals.

All of these actions add to the total cost that importers have to pay for bringing in their products while at the same time making it very difficult for importers to expedite shipments. I urge that importers in the Oakland and Northern California community plan accordingly and adjust their expectations in the coming year.

-Jimmy Ting

Great World Logistics (GWL)
Great World Customs Service
Great World Express

 

U.S. Solar Manufacturing Industry Attempts to Extend the Solar Module AD/CVD Case to Cover Taiwan

SolarWorld, on behalf of a coalition of U.S. domestic solar manufacturers, has submitted new AD and CVD cases to the ITC for review. This time around, the AD and CVD cases are broadened to cover both China and Taiwan. This is an attempt to close what SolarWorld has argued is a loophole in the original AD and CVD cases that were issued one year ago. The loophole allowed Chinese manufactured solar panels to enter into the U.S. without being subject to AD or CVD duties if they were manufactured in third countries. You can read more about SolarWorld’s justification in their news release.

What is important to understand is that by creating a case that includes Taiwan directly, SolarWorld is doing more than just closing a loophole. This is an attack on solar modules and solar cells from Taiwan, whether or not they are shipped indirectly through Chinese products. The Taiwanese solar industry is essentially the victim of collateral damage from the solar trade war between the U.S. and China. Since the U.S. instituted AD and CVD duties on Chinese solar modules last year, the Chinese government has responded by beginning their own AD and CVD investigations of U.S. polysilicon (a key raw material in solar module production) exports to China.

Note that as during the first AD and CVD investigation, not everyone in the U.S. solar industry supports this trade war. The Solar Energy Industries Association, a broad based coalition of solar companies in the United States that includes researchers, installers, and manufacturers, has spoken out against the new AD and CVD case. They would like to see a compromise to end this dispute.

The ITC has until February 14, 2014 to make a preliminary injury determination. It is extremely important that importers of solar modules made directly or indirectly from Taiwan solar cells follow this news closely. Feel free to contact me if you have any questions.

– Jimmy Ting

Great World Customs Service

http://www.gwlcorp.com

http://www.great-world.com

t: 650-873-9050 x1019

email: jimmyting@gwlcorp.com