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Near-record volume is main driver of LA-LB congestion, study finds

















JOCPort NewsUS PortsPort of Los Angeles




Bill Mongelluzzo, Senior Editor |



 Nov 14, 2014 5:54PM EST







The deterioration in truck turn times at the ports of Los Angeles and Long Beach the past six months was due primarily to near-record container volumes at the ports and a dislocation of chassis A truck capacity crunch, labor slowdowns and a half-dozen other events were simply irritants that made the problem worse.



“There have been no significant new congestion generators in six months. Record delays are attributable to near-record volume,”
said Val Noronha, president of Digital Geographic Research Corp.




The troubling message to take away from Noronha’s research for the largest U.S. port complex, and for other large container gateways, is that growing container volumes carried by bigger ships that discharge their loads in a narrow window of time are forcing ports to their saturation capacity.



For some ports, the saturation point could be a reflection of terminal capacity and landside infrastructure, but outdated cargo-handling processes contribute greatly to the problem.




“Performance capacity is the issue now,”
Noronha said in an interview this week following release of his research paper, “Turn Time — Meltdown or Summer Heat Wave?”






The ultimate answer to saturation capacity at the busiest container ports could be automation, Noronha said, because automation allows terminals to temporarily store containers in the yards in stacks that are higher and wider. 




A denser operation allows the terminal operator to handle more container throughput on an existing land footprint, and to do so more efficiently.




Noronha has studied truck turn times in Los Angeles-Long Beach the past several years using GPS technology that updates truck positions every few seconds. His most recent study focused on the current degradation of truck turn times at the marine terminals, but the conditions faced by truckers are also a reflection of the terminals’ reduced productivity of vessels at berth and the overwhelming yard congestion.




His numbers show that in October truck turn times hit a new low, with 36 percent of all truck visits lasting more than two hours. Trucking interests consider a one-hour turn time to be adequate for a single transaction, and two hours or longer to be so bad that it prevents truckers from earning an adequate living because they are paid by the trip.




Noronha said his research shows that due to the lengthy turn times, the average trucker must now budget four to four and one-half hours per visit to the harbor. That is up from two to three hours in 2010, and explains why many drivers are averaging fewer than two round trips per day.




Container volumes at all major U.S. gateways are increasing as the economic recovery gains steam. This is the case in Los Angeles-Long Beach as well, even though some cargo has been diverted to ports in Canada and on the U.S. East Coast since summer. Cargo interests are attempting to escape growing congestion problems at West Coast ports and the uncertainty due to the inability of the International Longshore and Warehouse Union and the Pacific Maritime Association to negotiate a new contract by the July 1 deadline.




The Los Angeles-Long Beach container volume in September of 1.4 million 20-foot containers was the fourth highest monthly volume ever, Noronha said. The ports went through a five-year lull in volume growth beginning with the economic recession of 2008-09. The incremental growth in volume masked the fact that the ports were edging toward their saturation capacity.




Beginning with the brutal winter of 2013-14 in the eastern half of North America, a variety of factors began to contribute to port congestion. Equipment and rail-car shortages that worked their way west, the impact of cargo surges from mega-ships with capacities of 13,000 to 14,000 TEUs, longshore labor actions and trucker strikes created an environment of declining port productivity on the West Coast, especially in Southern California.



The knock-out punch came with a surge of container volume in the spring as cargo interests shipped early to beat the July 1 ILWU contract deadline. Strong volume growth has continued. Noronha compared the ports to a freeway at 3 a.m. There is plenty of capacity to handle the traffic. Add weather conditions such as snow or rain, or other incidents such as an accident, and velocity is reduced, but freeway capacity is usually sufficient to handle the traffic. However, if those conditions persist into the morning rush hour, traffic velocity deteriorates rapidly and gridlock results.




JOC.com recently identified at least a dozen factors contributing port congestion in Southern California. Noronha said all of those factors play a role in port congestion and longer truck turn times, but there is no data available to quantify the contribution of each irritant to the mix.




Furthermore, many of the factors will be addressed over time. Equipment providers are working toward establishing the neutral, or gray chassis concept in the harbor beginning Feb. 1, 2015. The ILWU and PMA will eventually have a contract. Railroads are adding locomotives and rail cars to their fleets, and they are adding tracks in key corridors.




However, growing container volumes carried by big ships will continue. Barring another recession, the seasonal spikes in cargo volume before Chinese New Year in the winter, back-to-school shipments in the summer and the fall peak-shipping season will again slam the ports with container volumes that will bring them to their saturation capacity, Noronha said.




Terminal operators may hesitate to accept this theory because West Coast ports are generally believed to have excess capacity. The capacity glut is worse in the northern ports of Oakland, Seattle and Tacoma, where cargo volumes are not increasing as rapidly as they are in Southern California. Terminal operators at those ports estimate excess capacity at more than 50 percent. In Los Angeles-Long Beach, the terminals say excess capacity is about 30 percent.





Noronha is not so much concerned with the listed or design capacity of the terminals, but their effective capacity, especially during the seasonal cargo spikes. His numbers show that, at least this year, when the monthly volume hit 1.2 million TEUs, the real troubles began. That is what his numbers for degradation of truck turn times this summer and fall showed.




“If there’s a surprise, it’s that the numbers weren’t worse,”
he said.




Gene Seroka, executive director of the Port of Los Angeles, finds merit in Noronha’s theory. Seroka told a conference of West Coast forwarders and customs brokers last month that several of the port’s terminals were operating at 90 percent capacity utilization. The industry rule of thumb is that terminal velocity begins to deteriorate when utilization exceeds 80 percent of the listed capacity.





Noronha is concerned about the ability of the ports to handle normal seasonal volume spikes, but also unforeseen irritants such as chassis shortages and weather-related problems that degrade the entire supply chain and reduce service levels at the ports. “The current problems are severe, and the loss of capacity is intolerable,” he said.




The congestion problems of the past six months send a clear message to the ports and terminal operators that they do not have year-round excess capacity, so they must focus on their performance capacity to handle cargo, Noronha said.




While there is no single answer to the complex issues faced by terminal operators, automation can contribute to a solution, he said. Automating the movement of containers from the foot of the ship-to-shore container crane to the container stacks in the yard, and the movement of containers from the stacks to truck and rail transportation, accomplishes several goals.




Automation significantly improves worker safety because the jobs now performed by longshoremen moving containers on tractors within the yard, and lifting the containers into and out of the stacks, are eliminated through the use of automated guided vehicles and automated stacking cranes. Some tasks are shifted to the operating tower. The bottom line, though, is that with the elimination of workers in the cargo-handling areas of the terminal, there are no workers there to get hurt.




Automation eliminates some jobs and therefore reduces terminal operating costs. An April study by the Port of Los Angeles on automation being installed at the TraPac terminal concluded that 40 to 50 percent of the longshore jobs will be eliminated. The savings in cargo-handling costs continue year after year and eventually offset the huge cost of implementing automation.




Noronha focuses on the enhanced ability of terminals to stack containers in an automated environment. At present, longshoremen operating rubber-tired gantries and other container-handling machines are limited as to the size of the stacks they can build. However, rail-mounted gantry cranes such as those used at European terminals can stack the containers higher and wider. This significantly increases the throughput volume of a terminal. The denser operations will be needed as the annual throughput of busy terminals grows to exceed 1 million TEUs a year.




However, automation is a lightning rod for criticism and work slow-downs from longshore unions because they want to preserve the jobs of their workers, and the potential jobs that will be available to the sons and daughters of the current workforce. U.S. terminals to date on both coasts have only moved forward with automation when they calculate that their growing container volumes will be sufficient to produce a return on the massive investment that is required.




Automation can also be a factor in pushing the landlord ports on the West Coast to take a more active role in protecting their investments. The ports are investing hundreds of millions of dollars to modernize the terminals and build the landside infrastructure necessary to handle the growing cargo volumes. They recover those investments through the lease rates and other port charges paid by the terminals.





In a presentation last month to the annual conference of the Footwear Distributors and Retailers of America, Sam Ruda, chief commercial officer at the Port of Portland, said the existing labor-relations model of the PMA and ILWU is not sustainable. Ruda said the ports should have a role in protecting their assets, but they have not yet found what their role is.





Contact Bill Mongelluzzo at bmongelluzzo@joc.com and follow him on Twitter: @billmongelluzzo









http://www.joc.com/port-news/us-ports/port-los-angeles/near-record-volume-main-driver-la-lb-congestion-study-finds_20141114.html?mgs1=e490ielcuP

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