Is it Time to Rethink Your Global Strategy?
Below are clear root issues not likely to improve any time soon:
1. Labor Negotiations. The ILWU and the PMA are not coming to agreement on more automation, versus an increase in hiring. Neither a solution, nor a combination of the two is going to solve port congestion in the long-run. Unfortunately, no solution is even in sight and conditions are expected to worsen.
2. Real Estate. There are space constraints in ports to service mega-ships. Terminal operators are utilizing over 90 percent of their available land because of the congestion. After 80 percent utilization, service is degraded because there is nowhere to store containers. This results in wasteful, multiple handling of containers
3. Dwell Time. Due to the sheer size of today's ships, a fact that exacerbated by sailing schedules the dwell time for SSLs continues to increase by days and weeks. Simply stated, it takes a lot longer to off-load a 14,000 TEU vessel than it does an 8,000 TEU ship, and they consume a lot more space, cranes, chassis, trucks, drivers and on-dock/near-dock rail capacity when they finally do get a berth. There have been up to 17 vessels grounded outside of the bay waiting to be offloaded. This not only delays the scheduled offloading, but significantly delays the berth of the vessel as well.
4. Port-to-Rail Infrastructure. Limited land and increase volume causes rail yard congestion, without planning for larger support yards gain the age of the mega ship and additional containers leads to a math nightmare.
5. Chassis Shortages. Not much thought went into the change of chassis management when the SSL’s relinquished responsibility. There is not enough space to store them, nor enough equipment to go around to make a dent in the congestion.
6. Truck Drivers. Where truck drivers could once make 3 turns in the ports a day, they are now limited to one or no turns when trying to drop off or pick up containers from the port. This has created a deficit in their income and drives up costs to US Businesses awaiting their delayed containers – some up to 3 weeks.
All of these factors and more are causing Steamship Lines, Rail Yards and Trucking Companies to institute high congestion charges to offset their losses. These costs are outside our control and are a realistic part of the cost to ship in and out of the US in today’s market.
True to our name - Supply Chain Solutions, Inc. - we are not only monitoring the port conditions but are working on solutions with our clients to help minimize supply chain disruption and added fees. Please call us to strategize about your Supply Chain.