LA-LB Port Congestion Expected to Worsen
We have been experiencing extreme congestion at the ports of Los Angeles and Long Beach. Despite the global pandemic, the ports have had a “record” level of imports this summer. The ports are so busy, containers are being stored at the former Boeing site near Long Beach Airport.
The Journal of Commerce has reported that the congestion is expected to worsen over the next two weeks. This will result in productivity at the 12 container terminals in LA-LB to diminish further, chassis shortages will increase, drayage capacity will be stretched even more, and import distribution warehouses throughout Southern California will be more challenged to move goods.
Imports have increased over the last few months as shipments of personal protective equipment, e-commerce fulfillment, inventory replenishment, holiday season, and home improvement merchandise enters through the largest US gateway.
The entire supply chain is extremely strained. Terminals are struggling to move peak import volumes quickly enough to prepare for the next vessel arrival. When terminals are operating efficiently, they move import loads out of the gate in three or less days, currently it is taking over five days. Terminal operators are forced to rehandle containers which results in an artificial labor shortage because the productivity of longshore workers who operate rubber-tire gantry cranes and top-handlers is cut in half.
The terminal congestion has forced some vessels to wait at anchorage before they can proceed to berth. As a result of the congestion, truck turn times have increased, limiting the total truck capacity in the harbor. Weston LeBar, CEO of the Harbor Trucking Association, explained that some trucking companies are levying peak-season surcharges.
Because most of the truckers are owner-operators and can refuse to accept assignments if they choose to do so, trucking companies must pay those drivers higher wages to lure them to the terminals with the worst turn times, LaBar said.
Ed DeNike, president of SSA Containers, explained that volumes in September were the highest they have ever been at his three terminals in Long Beach. The chassis shortages are especially troublesome for SSA Marine because it operates on a model, which calls for draying most import containers to a near-dock storage yard as quickly as possible after they are discharged from the vessel in order to avoid congesting the terminal.
“We’re short of chassis. We can’t dray off the way we usually dray off,” DeNike said. Further delays in the supply chain occur once the import containers reach the distribution warehouses because a shortage of domestic transportation forces the containers, and the chassis that are carrying them, to sit longer at the warehouses, Bennett said. Bottlenecks at the warehouses are further aggravating the chassis shortages.
According to the Pool of Pools website operated by the three intermodal equipment providers, 40-foot and 45-foot chassis are remaining at the warehouses an average of 7.1 days, compared with the three-to-four days dwell time that is needed for efficient operation of the chassis pools.
The congestion will likely continue through the end of the year, and possibly until factories in mainland China shut down for the Lunar New Year holidays that begin on February 12th.