 Warehouses holding onto chassis, prolonging LA-LB port congestion |
Source |
American Shipper |
Post Date |
09/28/2020 |
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Warehouses in Southern California are holding onto containers and chassis an average of 7.4 days, almost twice the normal ¡°street dwell¡± time, prolonging a chassis shortage that is disrupting the delivery of merchandise amidst record import volumes.
The import surge that is fueling the chassis shortages is expected to continue at least through October as carriers plan to deploy about 20 extra-loader vessels to the ports of Los Angeles and Long Beach over the next six weeks, according to port spokesmen. That suggests congestion issues and chassis shortages are likely to linger at least for the next month.
The largest US port complex in August handled 830,649 TEU of imports from Asia, which was 58 percent higher than three months earlier in May, according to PIERS, a JOC.com sister company within IHS Markit. Containers are backing up at marine terminals because truckers do not have enough chassis to move the inbound loads to distribution centers.
¡°For us, the conditions are the worst they have ever been, because of chassis,¡± said Ed DeNike, president of SSA Containers, which operates three terminals in the Port of Long Beach. ¡°We can¡¯t dray containers off because there are no chassis,¡± he told JOC.com Monday.
Intermodal equipment providers (IEPs) are working overtime to repair out-of-service chassis and reposition chassis to Southern California from other parts of the country, said Ron Joseph, utive vice president and COO at Direct ChassisLink.
¡°DCLI has brought in labor every week to repair chassis,¡± he said. The number of out-of-service chassis in Southern California this week was 4,593, which was down from 8,800 two months ago, he said.
Excessive chassis street times the culprit
The primary cause of the shortage, however, is the average street dwell time of 7.4 days, which means that some chassis are stuck at warehouses a lot longer than seven days, Joseph said.
Congestion is also mounting at the ports of Los Angeles and Long Beach. The ports, which had been consistently operating at 75 to 80 percent utilization, are now at about 90 percent utilization, according to a senior utive at an import distribution provider. Terminal operators say service s to deteriorate when they operate at greater than 80 percent of capacity.
Container dwell time at the 12 terminals in Los Angeles-Long Beach increased to 3.2 days in August from 2.8 days in July, according to the Pacific Merchant Shipping Association. This is the first month since February in which the dwell time has exceeded three days, said Jessica Alvarenga, PMSA¡¯s manager of governmental affairs. About 10 percent of the containers remained on the terminals for five days or longer, which was up from 5.7 percent in July.
¡°Container dwell time is on the rise, and the amount of containers that remain on a terminal for five or more days is a concern,¡± Alvarenga said.
Carriers expect the import surge to continue for at least the next six weeks. In addition to the extra-loader vessels that will be deployed to Southern California, the first vessel in Mediterranean Shipping Co.¡¯s (MSC) new Santana service departed from Yantian on Sept. 7. MSC will deploy six 9,000-TEU vessels on the weekly service from Shanghai and Yantian to Long Beach, according to this week¡¯s Sunday Spotlight published by Sea-Intelligence Maritime Analysis.
Since the economic recovery from the COVID-19 lockdowns began in June, carriers have concentrated their shipments of personal protective equipment (PPE), e-commerce fulfillment merchandise, and overall replenishment of inventories through Southern California. According to PIERS, US imports from Asia moving through Los Angeles-Long Beach increased 22.2 percent from August 2019. By comparison, Asian imports moving through East and Coast gateways increased about half that amount.
Port Logistics Group, which operates warehouses in Southern California and at East Coast gateways such as Savannah, said that despite storage costs of $1.10 per square foot in California¡¯s Inland Empire and $1.45 in Los Angeles County, compared with $0.88 in Savannah, Southern California is the preferred gateway for imports from Asia because of the time-to-market advantages to the US interior it offers compared to East Coast ports. Storage costs in the area around the Port of New York and New Jersey are about $1.75 per square foot, he said.
The concentration of imports in Southern California has stressed the supply chain from the ports to the warehouses, as well as to the eastern half of the country. Drayage providers in Southern California are canvassing their colleagues in search of additional power and drivers, said Weston LaBar, CEO of the Harbor Trucking Association.
¡°Almost daily they ask other trucking companies, ¡®Can anyone supply more capacity,¡± LaBar said.
Shipping lines are urging customers to pick up and unload inbound containers from Los Angeles and Long Beach terminals and return the empty container and chassis as quickly as possible.
¡°We highly recomm the return of empty containers to free up chassis and improve operational velocity in terminals and storage yards,¡± Maersk Line said Monday in an advisory to customers.
Truckers say the ports, terminal operators, longshore labor, and drayage companies are working together through the Southern California port efficiency task force to address the congestion and equipment shortages throughout the supply chain, LaBar said. The quickest fix will be to better coordinate terminal and trucker operations so truckers can return an empty container to the ports and pick up an inbound load in the same trip, according to LaBar.
¡°We need more dual tran
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