The next big crisis affecting U.S. ports and shippers is rapidly taking shape. It’s clear that ports aren’t prepared to handle the mega-sized container ships arriving with increasing regularity. What should be at most a one-hour process for a truck to pick up a container from a terminal can at a number of ports — including the two largest, New York-New Jersey and Los Angeles-Long Beach — turn into an hours-long nightmare for the trucker and customer.
Truckers are known to wait four hours at the Port Newark-Elizabeth complex, and that’s often after waiting an hour or more just to enter the terminal. This is raising tensions between truckers and terminals to alarming levels and causing growing concerns among big retailers and other shippers.
This is new. Truck lines outside terminals have been a periodic problem for years; it’s why PierPass was implemented several years ago at Los Angeles-Long Beach — to spread out truck arrivals over a greater portion of the day, and truck engines idling outside terminals played a role in new policies to reduce emissions in port areas. But the scale of what’s happening now inside the terminal is a challenge the industry hasn’t faced, and as yet there is no solution.
The problem is accelerating despite the slow growth in container imports through U.S. ports — imports haven’t grown by more than 3.5 percent in any of the past three years, much slower than the double-digit growth rates seen prior to the Great Recession.
And the reality is that even if economists are wrong and container import growth doesn’t accelerate (JOC Economist Mario Moreno believes U.S. import growth will nearly double to 6 percent in 2014), the problem will grow anyway. That’s because ships are getting larger and the technology at most U.S. terminals isn’t sophisticated enough to process the growing number of containers being offloaded in a single port call.
How much is that single-ship volume growing? Mediterranean Shipping Co.’s largest port calls in terms of number of containers moved grew more than 30 percent from 2009 to 2013 to more than 10,100, according to a presentation given at the JOC Port Productivity Seminar in December in Newark. This is a change in the paradigm, irrespective of the economy and trade volumes.
Larger ships arriving at U.S. ports are a factor of increasing ship size generally — a result of carriers’ drive to reduce per-container costs — and access. At New York-New Jersey, which handles more than 30 percent of North American East Coast containers, two obstacles to handling ships as big as 12,000 TEUs will go away by the end of 2015. That’s when the Bayonne Bridge will be raised and its 50-foot (15.2-meter) channel will be completed.
That reality is slamming into a largely ill-equipped terminal industry. Part of the reason truckers can be made to wait for hours inside the terminal is that the location of containers often isn’t immediately known. The technology and process isn’t in place at many locations to pre-pick a container and have it ready for an arriving truck. Today the truck arrives, enters the terminal, and then waits possibly hours while the container is found and finally lifted onto the chassis.
In discussing this challenge, it’s important to differentiate between systemic problems — such as technology and larger vessels — and issues occurring now that are mostly temporary. Maher Terminals at New York-New Jersey experienced problems last summer implementing a new terminal operating system, and recent weeks have seen severe backups at the port because of two snowstorms, a pre-Chinese New Year surge in arrivals and the U.S. holidays when the terminals were only open to trucks for five out of 16 days, according to the port. And add longshore labor shortages that are the subject of an entirely separate, bigger dispute.
But the fact that terminal-related congestion is appearing elsewhere, including Los Angeles-Long Beach and Virginia, is evidence of what is beginning to look like a national problem.
Strip out the temporary issues and the core problem remains: If nothing has happened inside the terminal to have the container ready for when the trucker arrives, and the process only starts when the trucker has arrived, the game is lost.
A solution requires leadership, and data. Metrics are needed to track turn times, as is now beginning to happen at Los Angeles-Long Beach. Technology is required, but money is scarce; it originates from the carriers whose overbuilding as an industry has driven down rates and thus the ability to invest in service.
The industry must solve this on its own, because if delays grow too severe and big retailers start complaining, someone else, probably less sensitive to the needs of the industry, will step in. No one wants that.