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All sectors agree regarding supply chain logistics deterioration
Source
American Shipper
Post Date
10/05/2018

All sectors of the supply chain agree that the logistics problems went from difficult to worse on April 1, 2017, when carriers reduced their four vessel-sharing alliances to three, with more carriers in each alliance. For Los Angeles-Long Beach, where a number of the carriers still have a corporate or investment connection with the terminals, that means the members of a single alliance must position chassis or return empty containers to three or more terminals.
“It’s not like it used to be, where a container went out of a terminal and the empty was returned to the same terminal,” said Ed DeNike, president of SSA Containers. SSA operates three container terminals in Long Beach and it serves all three alliances. The shipping lines instruct the BCOs and their truckers to which terminals they want the containers returned after they have been unloaded based on vessel departure dates, the capacity of the vessels to load empties, or the financial arrangements the lines have with the individual terminals. “Sometimes it gets to the point where we have to stop taking empties because of the fill rates,” he said.
Los Angeles-Long Beach is unlike any other port in the country because vessels disge 80-100 percent of the containers from each call in Southern California before proceeding to Oakland and returning to Asia. The cargo surges keep growing with the size of the vessels, said Gene Seroka, utive director of the Port of Los Angeles. He told the Harbor Association of Industry and Commerce on Sept. 27 that a record was established at APM Terminals when three 13,000-TEU vessels were handled simultaneously, with one of the ships exchanging a 24,800-TEU container.
When a terminal gets hit with a cargo surge of that magnitude, the operator often has no choice but to deny receipt of any more empty containers until it is able to make room in the yard by loading the empties and export loads onto the vessel. The terminal operator is inconvenienced by these surges. Alan McCorkle, vice president of Yusen Terminals in Los Angeles, said last week he had to cancel two Customs and Border Protection Vehicle and Cargo Inspection System exams because of yard congestion, and the grounding of containers because of chassis shortages means costly work incurred by deployment of rubber-tired gantry cranes.
The scattering of containers and empties across multiple terminals was intensified by last year’s alliance reconfiguration, and the effects of carrier mergers in recent years is adding to the complexity in large port complexes such as Los Angeles-Long Beach. The April 1 start this year of Ocean Network Express resulted in the three Japanese lines, each with its own terminal, attempting to fulfill its volume commitments to the terminals and the ports. Cosco Shipping’s acquisitions of China Shipping Container Line and OOCL are likewise resulting in the scattering of empty containers and equipment among several terminals on a weekly basis.
While the logistics problems resulting from this consolidation of carriers and alliances is costly for the terminals, it is creating a host of problems for truckers, especially when the terminals shut off the return of empty containers. “We’re sitting on empties I can’t return,” Fred Johring, president of Golden State Logistics, said Monday. That condition ties up not only the empty container but the chassis it is mounted on.The logistical problems reverberate throughout the supply chain. “It s a domino effect in the harbor,” he said.
The volatility of cargo flow
The peaks and valleys of cargo flow exacerbate the demands placed upon the chassis supply, creating shortages at some terminals and overflows at other terminals. This problem was highlighted by an email exchange this week involving a marine terminal and trucking company. “The chassis situation we have had the past week is still an ongoing issue to get the loads moved,” the terminal stated. “We are again attempting to move 1,200 tonight,” the terminal operator said.
Ron Joseph, utive vice president and chief operating officer of Direct ChassisLink, Inc. (DCLI), said there are currently 65,000 chassis in the pool of pools in Southern California, but they are scattered at the marine terminals, rail yards, and distribution warehouses throughout the vast region. The migration of chassis is the number one issue in the pool of pools, he said. The pool was launched in March 2015 by DCLI, Flexi-Van, and TRAC Intermodal. The so-called gray pool has improved chassis availability because all of the equipment is interoperable, meaning chassis contributed by the three IEPs can be picked up at one location and delivered to any other location. However, during periods of congestion in late summer and autumn, chassis dislocations get progressively worse. McCorkle said Yusen Terminals has struggled with chassis shortages for six weeks now. “It’s been really bad the past two weeks,” he said.
“We monitor this daily,” said Sean Pierce, CEO of P5 Infrastructure, which operates the Eagle Marine/APL terminal in Los Angeles. September was a brutal month, he noted, with the terminal requesting 500-750 chassis a day and receiving only about 225. Pierce called upon the operators of the pool of pools to provide more clarity as to where the inventory of chassis are throughout the region, how many chassis each of the terminals are using, and where the imbalances are. “I have yet to see the chassis burn rates from the IEPs. We do not have enough transparency from the pool,” he said.
DCLI, which acted as the spokesperson for the three equipment providers for this story, said the new alliances certainly contribute to the dislocations with chassis scattered across a dozen terminals. With 52 percent of exports and empties going back to different terminals from where the import containers came in, “significant dislocation” results, Joseph said.
The pool of pools’ joint repositioning group works daily to correct the imbalances by moving thousands of chassis a week around the port, he said. The IEPs are also working with the terminals to reduce the number of out-of-service chassis sitting idle at the terminals. “The POP [pool of pools] is working with the marine terminal operators to get the 6,000 chassis on terminal that haven’t moved in over 60 days back into usage,” Joseph said.
The current situation involving both chassis shortages and problems returning empty containers is being exacerbated by heavy container volumes. “I’ve seen this annually — it is aggravated by peak-season volumes,” said Lawrence Burns, senior vice president of trade and sales at Hyundai America Shipping Agency. Importers in the peak season keep import loads and their chassis at distribution facilities longer. “It makes it difficult for equipment managers to fore when the equipment will be returned. We see it in the detention collection,” he said.
Solutions are still being worked on, Burns said, such as a more robust exchange of information through the port information portal under development at the ports in cooperation with GE Transportation, and the increasing use of trucker appointment tems to manage truck flow at the terminals.


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