February 18, 2015
How Many Work Days Are In A Standard Work Week?
This is a trick question obviously. In Oakland, the latest tit-for-tat we are seeing this week is the ILWU deciding to hold their monthly work stoppage meeting during regular weekday working hours this Thursday rather than during night hours (standard practice). This is obviously retaliation for the PMA not employing ILWU labor over the President’s Day weekend to unload containers.
Cory Peters of Gardner Trucking explains the current situation very well in his recent newsletter to us:
ALL TERMINALS CLOSED IN OAKLAND 2/19:
The ILWU in Oakland has just announced they will be holding their monthly Stop Work meeting this Thursday during the day-shift (0700-1630). This means all terminals at the Port of Oakland will be closed Thursday. The IWLU holds Stop Work meetings on the third Thursday of each month in Oakland and on the first Thursday of each month in LA/Long Beach. These meetings typically take place on the second shift (1800-0200). It appears this week’s Stop Work meeting is in direct retaliation for the PMA not allowing them to work yesterday’s holiday and this past weekend. Since Oakland has no night gates, this will be the 3rd full closure of the port in the past 5 working days.
PMA/ILWU CONTRACT NEGOTIATION UPDATE:
There is no update. Both sides continue to play games while directly affecting the livelihoods of your business and ours. Rumors continue to circulate as to what the problems are, but to date actual productivity at the port terminals remains horrendous. As most of you know, it is nearly impossible to ship exports at this time, and those on the import side continue to see delays of numerous weeks, some over a month. I’ve said it before, and I’ll say it again… even when a contract is agreed upon between the PMA and ILWU, there will still be serious fundamental problems with the industry which will not have been addressed. The situation at the port terminals will be better than today, but far from where they should be.
EMPTY RETURN RESTRICTIONS:
We have seen a massive increase in the number of Steamship Lines not allowing empty containers to be returned. For those not aware, this means import containers have nowhere to go back to once they are unloaded. Not only does this hurt the supply of available empties for exports, the Steamship Lines are still charging container per diem for not returning the empties (even though they will not provide a return location for said empties). This is happening much more in Oakland than LA/Long Beach. As of today, the following Steamship Lines are not receiving empty containers, or are putting restrictions on the returns which make them nearly impossible to return (i.e. dual transactions only):
|Mitsui OSK Lines||Oakland|
Effective immediately, we will be adding stop-off and storage charges on all empties which cannot be returned. These will be added to our import drayage invoices. We apologize for having to do this, but unfortunately we cannot continue to store the Steamship Line equipment for free. Ideally, we could charge the Steamship Lines for this, but because of the way the Interchange Agreements are written, there is currently no recourse for this. Stop-off charges will be $100/container, storage charges will be $25/night. Per Diem charges levied by the Steamship Lines will be passed through as we currently do.
You’ve probably read about chassis shortages in the recent press releases regarding the port situation. The empty restrictions listed above, as well as the vessel delays not allowing export loads to be returned are tying up thousands of chassis along the West Coast. Sure, there are other issues with the current chassis model, but the majority of the chassis shortages today are a direct result of the terminals not accepting containers. If you keep thousands of containers and chassis out of the terminals, there are not enough chassis to pick up more containers at the terminals.
I couldn’t have written it any better. We heard over the weekend that President Obama has finally sent the Secretary of Labor, Tom Perez, to intervene, but at this point, I don’t see what good the White House can do. They sent a Federal mediator at the beginning of the year. Six weeks later, the ports are even in worse shape.
The Wall Street Journal also wrote a piece this morning talking about the damage that this port crisis is having on the economy. I am sure that each and everyone importer and exporter is experiencing the pain firsthand.
I keep wishing for some positive news.
Conditions at the West Coast port terminals have seriously deteriorated in past weeks. I have been writing about how horrible conditions have become awful in the past month. Apparently, drivers at the port of Oakland have had enough. We received a message last Friday from one local trucking company that drivers at the Oakland port were intending to protest at the port terminals today, Monday, December 8th. We have confirmed this morning that many trucking companies are indeed facing a protest. Here is a message from one our local drayers:
Today , drivers have not shown up for work in support of the truckers work stoppage against the unreasonable delays at the terminals and to highlight their complaints against Union workers. We have learned that numerous drivers, including our own independent contractors, have agreed not to work , either to join their support to the protest, or out of fear for their safety.. Moreover, several transportation companies will not be sending their drivers to the terminals on the day of the protest.
This protest at the port of Oakland is unfortunate in timing, but should not come as a surprise. We have seen the West Coast terminal situation become absolutely unbearable as truckers are not able to consistently get into the terminals to pick up and return containers.
I would like to also share a snapshot of messages we have received this past week from what we consider to be some of our long standing most trusted trucking partners along the U.S. West Coast.
- “There most likely will be demurrage charges for this container. We will only accept if you guys guarantee demurrage for however many days we need to pull container. Also, once your container becomes available, we won’t be able to schedule until the LFD. We have too many demurraged containers at the moment. Please confirm. Thanks”
- ”Well received and even we got the order days ahead before the arrival, there’s no sufficient time to pull out containers from terminals. Due to terminals congestion, we don’t guarantee pickup of containers on or before the LFD. Please provide allowance for additional chassis usage because we’re having problems on the return too. Thank you.”
- “Notes: Due to the current situation at Oakland Port, we will not be responsible for DEMURRAGE CHARGES if container is not p/u before the last free date. In order to process the order and assured that we received the document we will acknowledge receipt of your order by providing a REFERENCE#. If we do not reply, please contact us immediately”
The reality is that there is no guarantee these days that a driver going into a terminal will be able to get out of a terminal in any reliable time frame, if at all. In the past, trucking companies were able to schedule drivers to arrange pickups and deliveries ahead of time with a basic amount of certainty. However under current conditions, trucking companies are having to turn away pick up and delivery requests because they just cannot be sure their drivers will be available to successfully get into a terminal. If the trucker does accept the delivery order, they are requesting that we provide a flexible time frame for actually retrieving the container. This means that there WILL be a possibility that a container may not be picked up until AFTER the last free day. This means there may be BOTH demurrage charges to be paid to the terminal AND waiting time charges to be paid to the trucker. In the case of the port of Seattle and Tacoma, we ask that importers be aware that trucking companies are having extreme difficulty even returning empty containers. This can lead to storage and detention charges on empty containers.
Many of our long time trucking partners have turned away a large amount of business in recent months. This turning away of business has only accelerated in recent weeks with various truckers already stating they are booked through much of the month of December.
I have been pleading with our customers to be patient and flexible in this time. If we are assisting you with your trucking moves, this means that we ask that you be understanding if we indicate that we are looking for drivers that can assist with a delivery. You may find that we are using alternative trucking companies outside of normal ones you are used to working with. We ask that you be understanding if we indicate that there may be demurrage and/or special waiting time/congestion charges associated with a pickup.
Great World is first and foremost a service company that has the best interests of our customers at heart. We value our long term partnership with our customers and believe strongly in building mutually beneficial relationships. This is an extremely trying time. We ask that you work with us as well as the trucking community to get through it.
If you have any questions, feel free to contact me.
As expected, carriers are starting to announce the return of the Port Congestion Surcharge. Carriers postponed the PCS earlier this week due to concern from the FMC. However the carriers are indeed struggling with the congestion at the ports. As long as congestion continues, it is of no surprise that the carriers would try to find a way to implement the PCS.
Here is the latest breakdown from the various carriers and where they currently stand. I have indicated in bold below the carriers that have confirmed the PCS again. Please be careful to distinguish the effective dates and whether they are based on the Gate-In date at the port of origin or whether it is base don the discharge date at the destination port.
I do believe other carriers will soon be jumping back in and assessing the PCS. I will keep everyone updated.
|US PORT CONGESTION SURCHARGE 2014||Last update Nov 21 2014|
|Carrier||Applicable on shipment Discharge or Via||$20||40′||HQ||45′||Effective Date on/after||Remark|
|APL||All US Ports||800||1000||1125||1265||TBA||Gate in Date at origin (based on last container gate in date in B/L)|
|CMA||LGB/LAX Ports||800||1000||1000||1266||Suspend the implementation until further notice||Discharge Date at USWC Ports|
|COSCO||All US Ports + Canada Ports||800||1000||1125||1266||TBA||Discharge Date at Ports|
|CSCL||USWC Ports||800||1000||1125||1266||Postpone until further notice||Discharge Date at Ports|
|EMC||USWC Ports||800||1000||1125||1266||21-Dec-14||Discharge Date at USWC Ports|
|Hamburg||USWC Ports||800||1000||1125||N/A||Suspend the implementation until further notice||Discharge Date at Ports|
|Hanjin||USWC Ports + Canada Ports||800||1000||1125||1266||26-Nov-14||Gate in Date at origin|
|Hapag Lloyd||USWC Ports||800||1000||1125||1266||Postpone until further notice||Discharge Date at Ports|
|Hyundai||USWC Ports||800||1000||1125||1266||Postpone until further notice||Discharge Date at Ports|
|K-line||All US Ports||800||1000||1125||1270||TBA||Gate in Date at origin|
|Maersk||USWC Ports + Canada Ports||800||1000||1125||1266||Postpone until further notice||Discharge Date at Ports|
|Matson||USWC Ports||500||500||500||500||3-Dec-14||ETD of the Vessel at Origin|
|MSC||USWC Ports||800||1000||1125||N/A||26-Nov-14||Gate in Date at origin|
|NYK||USWC Ports||800||1000||1000||1000||26-Nov-14||Gate in Date at origin|
|OOCL||USWC Ports + Canada Ports||800||1000||1125||1265||Postpone until further notice||Gate in Date at origin|
|PIL||USWC Ports||800||1000||1125||–||Postpone until further notice||Gate in Date at origin|
|UASC||USWC Ports||800||1000||1125||–||Delay the implementation until further notice||Discharge Date at Ports|
|WANHAI||USWC Ports||800||1000||1125||1266||24-Dec-14||Discharge Date at Ports|
Carriers Begin Charging Port Congestion Surcharge
As expected, steamship lines have begun announcing that they will begin charging the Port Congestion Surcharge. We received announcements from the following carriers that they will begin charging the PCS for all containers arriving at U.S. West Coast Ports on or after November 17, 2014.
- Hyundai –
The amount of PCS that we are seeing applied to IMPORT containers is currently as follows:
The original PCS that most carriers announced gave them the latitude to levy the charge on containers at all U.S. ports. However currently, the announcements we have seen are only applying to West Coast IMPORT containers. We are expecting most of the other carriers to join in and begin collecting the PCS.
For EXPORT containers, thus far we have only seen Evergreen announce a PCS ($240/20′, $300/40′, and $375/45′). I would imagine other carriers might be joining in to announce a PCS on export containers as well.
Current Status of the USWC Ports
The USWC port terminals are open and operating today. Reports have come out that the Teamsters have been striking at six Los Angeles / Long Beach terminals. However thus far, the ILWU has not honored the picket line and have kept the terminals in Southern California open.
In Oakland, all four major terminals are open today. SSA remains a terminal of concern as we have seen the terminal close twice in the past week. Heavy congestion and backlog remain.
The PMA sent out the following message yesterday, critical again of the ILWU’s behavior in recent weeks. With this message, we are seeing a continued escalation of tensions at the USWC ports.
We are still monitoring this situation closely and will provide updates as soon as we receive them.
We expected to see more congestion than normal on the day after Veterans Day. As of 10:55am, we already have our first terminal closure. SSA Terminal in Oakland has shut down for the day due to ILWU labor issues. This is the second time in the past week that the terminal was shut down. As many of you are aware, SSA Terminal in Oakland also shut down last Friday afternoon due to ILWU labor issues.
We have not heard of any closures yet in Los Angeles/Long Beach or Seattle/Tacoma. However we do know that carriers are already limiting or not accepting exports through various terminals due to extreme congestion. Furthermore there was news yesterday of potential trucker demonstrations in Los Angeles/Long Beach ports.
As I mentioned last week, the situation at the ports is extremely tenuous. We know the many reasons for congestion at the ports. However the labor contract negotiation between ILWU and PMA should be taking center stage right now as it threatens to completely shut down USWC ports.
I also wanted to remind importers that the carriers have within their contracts port congestion surcharges that they can assess if there is a shutdown at the ports. The port congestion surcharge for most carriers is listed at $800/20′, $1000/40′, and $1125/40’HQ. We have heard that there carriers are in serious discussion about whether or not to start assessing the surcharge.
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.
The Port of Oakland Truckers Association (POTA) voted on late last Friday to stop work at the port of Oakland this Wednesday, November 27th. While truckers are still dissatisfied with the turn time at various terminals at the port of Oakland (specifically with SSA), their current complaint is mainly focused on the January 1st deadline set in place by the California Air Resources Board (CARB) for the trucks to be retrofitted to meet new emission standards. POTA is asking the port of Oakland to charge a $50 per container emissions fee to help pay for the cost and maintenance of CARB compliant trucks.
With CARB and the port of Oakland not signaling any willingness to accept the request, POTA has has indicated they will demonstrate. The city of Oakland has indicated they will have police officers on site to make sure the roads leading to the terminals are open. However there is no guarantee that they will be successful. The other wildcard in the process are the ILWU longshoremen. If the longshoremen do decide not to cross the picket lines, it isn’t going to matter whether the Oakland police are able to keep the roads open.
Importers should be prepared for more possible delays.
The port of Oakland (along with the ports of Los Angeles and Long Beach) have made concerted attempts in the past few years to rein in pollution caused by trucks pulling containers from the ports. The California Air Resources Board is regulating the types of trucks, specifically the engines, that are allowed into the ports. As of the January 1, 2013, trucks with 2006 or older model engines are no longer allowed into the port terminals of Oakland. What surprised me was how many trucking companies seemed to be unprepared for this change.
We discovered in the past week a sudden drop in capacity of drivers. Rough estimates by various trucking companies estimate the drop in capacity by as much as 20%. This, combined with congestion at the terminals, has led to delays in getting containers out of the port. Some truckers are in the process of getting new trucks. Others are in the process of replacing their engines. Some drivers are opting to modify their engines to become compliant (a short-term solution). From talking to various trucking companies, they estimate that this process may take a few weeks to complete. I would not expect a resolution to this issue until after the Chinese New Year.
In the meantime, importers and exporters should plan ahead with the knowledge that they may not be able to get containers out of the ports as quickly as they have in the past. I would advise importers to be flexible with their receiving schedule and have a strong line of communication with their trucking companies.