Before one of Orient Overseas Container Line's new 8,000-TEU ships could make its first call last summer - the first ever by a ship that big in Southern California - Long Beach Container Terminal had to raise its cranes 15 feet to handle the ship's additional levels of on-deck containers.
"It used to be that six containers high was all they went," said Arthur Merrick, the terminal's president. "Now they're going to a seventh and eighth tier."
That's just one of many changes that terminal operators in Los Angeles and Long Beach are having to make as they prepare for a wave of container ships bigger than any port has ever seen. At least three strings of ships in the 8,000-TEU range will be serving Long Beach next year, the vanguard of more than 80 such ships that are currently on order at shipyards. "We're preparing for them right now," said Ed DeNike, chief operating officer at SSA Marine.
China Shipping Container Line will launch the parade of big ships into Southern California next summer with a string of 8,000-TEU vessels that will call at the Hanjin Shipping Co. terminal, which is operated as a joint venture of Hanjin and Marine Terminals Corp. Starting next fall, SSA will handle a joint service of Mediterranean Shipping Co. and CMA CGM and another string operated by China Ocean Shipping Co.
Although the OOCL Long Beach, the first 8,000-TEU ship to call at Long Beach, has been redeployed to the carrier's Asia-Europe service, OOCL has ordered 10 similar ships. The carrier plans to begin regular calls at the port with ships of that size during the next year or two.
And that's only the start. American Marine Advisors, a New York investment bank, reports that shipyards have 84 firm orders for 8,000-TEU ships. China Shipping reportedly has ordered eight 9,500-TEU ships.
Most of the megaships will initially be used in the Asia-Europe trade, where carriers can most easily exploit the economies of scale that the larger vessels provide. The Asia-Europe route requires at least eight ships for a fixed-day, weekly service, compared with five for an Asia-U.S. West Coast service.
But with some also being deployed in the trans-Pacific, ports and terminals are moving to upgrade facilities and change operating practices to handle them. Terminal operators are counting on new technology to prevent congestion at container yards, lines of trucks at terminal gates, and shortages of longshore labor.
Initially, most of the megaships that call fully loaded at U.S. ports will be confined to Los Angeles-Long Beach. The vessels are way too large to transit the Panama Canal to East Coast ports, and Oakland's 42-foot channel can't accommodate the bigger ships fully loaded until a current project is completed to deepen the port's harbor to 50 feet. Seattle and Tacoma can handle the big ships but lack the cargo volume to fill them. Many of the ships will discharge all of their cargo at Los Angeles or Long Beach, reload immediately, and return to Asia. But some may continue up the coast with lighter loads to either Oakland or the Pacific Northwest.
For some terminals in Southern California, the 8,000-TEU ships will represent only an incremental increase in ship size. Long Beach Container Terminal already regularly handles 6,000-TEU vessels. But most trans-Pacific ships aren't that big. A recent report on liner shipping by MOL Ltd. said that at the end of 2002, the average size of ships on 57 vessel strings operated by trans-Pacific carriers was still only 3,877 TEUs.
That average will increase rapidly during the next few years. Many of the 8,000-TEU ships entering the Asia-Europe trade will displace 6,000-TEU-plus ships that will be put on Asia-West Coast routes. Maersk Sealand, the world's largest container carrier, had 27 vessels of at least 7,000-TEU capacity in its global fleet as of mid-2003, according to Paris shipbroker Barry Rogliano Salles.
Going from 4,000-TEU ships to vessels of 6,000 to 8,000 TEUs overnight can strain marine terminals and the transportation infrastructure outside their gates. "I am very concerned about the ability of the infrastructure in Southern California to handle an onslaught of 8,000-TEU ships," said Douglas Tilden, chief executive of Marine Terminals Corp.
To begin with, an 8,000-TEU ship will require 125 to 140 acres of terminal space to support the vessel call, Tilden said. If the terminal is handling only one liner service per week, that would not present a problem, but most terminals in Los Angeles-Long Beach handle three or four services per week with vessels ranging in size from 3,000 to 5,000 TEUs.
To keep vessels on schedule, terminals will have to work the 8,000-TEU ships in three days, or four days at most, Tilden said. "You don't want to throw an 8,000-TEU ship off schedule," he said.
That will require five cranes working simultaneously, instead of the three or four that are normally used now. The extra cost to terminals will be $2,300 to $2,500 per crane per longshoremen's work shift. When ground labor and clerks are included, the total cost is about $15,000 per shift.
Cost won't be the only problem. When the ports are especially busy, such as during the peak shipping season, the Pacific Maritime Association is forced to limit each terminal to three longshore work gangs per ship. Labor shortages could make it difficult for operators to turn the ships around on time.
Terminals plan to use at least two full shifts per day of longshoremen. DeNike said he expects SSA to work the 8,000-TEU ships round-the-clock, which means two eight-hour shifts plus a five-hour late-night shift. That means the terminal must have access to 15 skilled crane operators each day that the 8,000-TEU ships are in port.
The Los Angeles-Long Beach port complex has 13 terminals. If only two or three of them are handling 8,000-TEU vessels on the same days, there should be enough experienced crane operators to handle the workload, terminal operators say. But as the larger ships become common, the supply of skilled longshore labor could become tight.
James McKenna, chief operating officer of the PMA, said the management association monitors labor requirements at West Coast ports and continually trains workers to operate cranes and other container-handling equipment. He said the process is accelerated to accommodate surges in demand.
Operators also are counting on help from the six-year contract between the PMA and the International Longshore and Warehouse Union. The contract, which took effect on Feb. 1, sharply increased pay for heavy-equipment operators to encourage more ILWU members to seek those jobs. Employers say they're seeing signs that longshoremen trained to handle those jobs are sticking with them rather than opting for less-strenuous marine clerk jobs.
Terminal operators say the PMA will have to chip away at side deals under which some longshoremen are paid eight hours for four hours' work. The PMA took a step in that direction this summer by eliminating one of four "swingman" positions assigned to each crane in Southern California. Those workers, who secure containers to the yard tractors, had traditionally worked four hours on, four hours off, which means there were usually only two swingmen working under each crane at a time.
McKenna said the PMA is reviewing such arrangements, and that further adjustments could be made - although he said crane operators aren't expected to work eight hours straight because of safety considerations. "There won't be any changes where there is a safety impact," McKenna said.
Port authorities will also play a role in accommodating the 8,000-TEU ships, even though the ports don't operate marine terminals. To move containers faster, ports may reduce the five days of free storage that importers receive before they are charged late fees, or demurrage. As ships get bigger, "it's very possible that we will lower the free-time allowance," said Don Wylie, director of trade and maritime services at the Port of Long Beach.
Computer technology also figures heavily into terminal operators' plans for coping with the next wave of big ships. The new PMA-ILWU contract gives the terminals much more flexibility to equip cranes and terminal gates with optical character readers, and to install yard-management systems controlled by global positioning satellites. By eliminating retyping of information by marine clerks, this technology reduces the time needed to provide equipment operators with instructions on where to pick up and deliver containers.
New technology is already speeding container-yard operations, which have been more of a drag on productivity than either the container cranes or the terminal gates, terminal operators say. Long Beach Container Terminal's Merrick said container-yard transtainers used to average only 60 container moves a day, but that computer technology allows them to move 80 to 100 boxes per day.