Congestion at the Ports of Los Angeles and Long Beach
The ports of Los Angeles and Long Beach are currently experiencing severe congestion, which has been exasperated over the past two weeks. The congestion is resulting in container delays (average over 7 days), increased driver “wait time” (over two hours is the responsibility of our customer), equipment shortages, and terminal yard closures resulting in containers being inaccessible.
The congestion results in additional challenges including demurrage charges, increased wait times resulting in reduced local drayage capacity (1-2 pickups a day instead of 2-3 pickups a day), and other fees that are necessary to recover containers at the terminals. Krieger Worldwide is doing everything we can to mitigate these additional charges wherever possible, but in some cases, despite our efforts, they are unavoidable.
The port congestion is also affecting LTL/LCL and IPI moves. Many shippers are experiencing extreme delays for cargo imported into the west coast that is eastbound.
The CMA CGM system compromise has also been compounding the extreme congestion. The cyber-attack affected the ability to get pick up numbers, arrival notices, freight releases, and more.
During the onset of the COVID Pandemic, there was a massive reduction in cargo moving to the US. This resulted in carriers reducing capacity, terminal operators hired less labor and closed gates, and chassis providers let inoperable equipment sit in disrepair.
The reduction of capacity in the market caused a displacement of equipment. In June, there was a massive increase in demand for space. Volumes grew rapidly and reduced capacity was reinstated. This increase led to our current situation. We have too much equipment in the U.S., occupying chassis, and a shortage of 40’/HC containers in Asia. Chassis providers have not been able to repair inoperable equipment quickly enough for the demand.
Carriers began to introduce extra loader vessels, which are unplanned ships calling at the ports. This saves the carriers money on demurrage at origin, while also providing access for spot market freight rates. But this is detrimental at the terminals because more cargo than planned continues to arrive at the ports causing congestion.
Truck driver availability to recover containers from the terminals has become an issue at the Los Angeles and Long Beach ports. Due to the congestion, drivers are unable to make as many pickups in a day as they previously were. Drivers are reporting longer wait times, as well as, less appointment slots.
There continues to be conflict amongst the ocean carriers, terminal operators, chassis providers, and drayage providers, all citing operational issues with the other parties. This discord continues to escalate demurrage costs to the importer, as it is too difficult to isolate the root cause between all the parties. The trucking community has responded to the increase of demurrage by no longer accepting delivery orders without immunity from demurrage. They do this by insisting the demurrage be paid directly by the importer, their broker, or freight forwarder.
We advise all our clients to request bookings as early as possible. We appreciate your patience during this difficult time.