This time last year, David Walker had big problems. Like many other shippers, the executive vice president of Pier 1 Imports watched with dismay as backups at the ports of Los Angeles and Long Beach forced dozens of container ships to wait at anchor to unload.
Compared with 2004, this year's peak season has been a breeze. "It's been a very successful season so far," Walker said. "There have been no major problems."
Other importers offer similar assessments. After months of worrying about whether the Los Angeles-Long Beach port complex could handle this year's crunch period for holiday-season imports, the ports and related intermodal systems are running smoothly.
Rhona Lishinsky, senior director of logistics at Cost Plus Inc., uses Oakland for most of her company's Asian imports. Even so, Cost Plus was affected by last year's problems in Southern California, because most carriers' Pacific Southwest services call there first before proceeding to Oakland. Last fall, the ships were invariably late getting to Oakland. This year they've been consistently on time, Lishinsky said.
One reason for the improvement at the Los Angeles-Long Beach gateway is that many importers, like Pier 1, have shifted some cargo to other ports, especially on the East Coast. The diversion has relieved the strain on Los Angeles-Long Beach, which handles more than 40 percent of U.S. containerized imports. But that's not the full story. Many importers have shipped earlier than usual, carriers and shippers are producing better cargo forecasting, railroads are functioning smoothly, longshore productivity has improved, and the PierPass program has diverted truck traffic to nights and Saturdays.
"Everybody is working together," Walker said.
Last year, backlogs at the ports began surfacing in June and continued till November. This year, it's starkly different. Halfway through the summer-fall peak season, shippers say they've seen virtually no delays. And they say they don't expect any severe problems in September and October, always the busiest months for the eastbound trans-Pacific trade.
They say the changes that produced this year's success could provide a foundation for smooth operations next year. This is important because, with ports that have received cargo diverted from Southern California bumping against their capacities, shippers and carriers may have no choice but to rely heavily on Los Angeles and Long Beach in 2006.
Of all the changes that have contributed to the improved flow of cargo, none is more remarkable than the ones related to longshore labor. Marine terminal operators and the International Longshore and Warehouse Union deserve much of the credit for this year's smooth operations. During the last year, employers have hired more than 5,000 new part-time workers, known as casuals. They've also promoted at least 2,500 casuals to registered status and eased chronic skilled-labor shortages by training the registered longshoremen to operate container-handling equipment.
Equally important, the ILWU dispatch system has been refined so that workers now arrive at terminals on time. This required a series of decisions by arbitrators, who are appointed jointly by the ILWU and the Pacific Maritime Association. The arbitrators determined that it is the responsibility of the union to get its workers to the terminals on time, said PMA President James McKenna. The union hiring hall pushed the dispatch times forward in 10-minute intervals so that now most terminals are staffed by 7:30 a.m., rather than 8:30 a.m. or later, as used to occur.
Arbitrators also ruled that registered longshoremen must accept the highest available job for which they are trained. Previously, workers would regularly pass up key equipment jobs for those that were less strenuous or did not require eight hours of work. Now longshoremen who are trained to operate yard tractors, side-pick or top-pick equipment must take those jobs when they are posted. "The bottom line is we've got the right guys on the right jobs at the right time," McKenna said.
The introduction of technology is also helping, to a degree. Most terminals have installed cameras and optical character readers at truck gates. This not only reduces the time needed to process trucks but frees ILWU marine clerks for more productive work.
Most terminals, however, have yet to automate their yard and vessel operations. When they implement global positioning satellite systems in their yards and equip their cranes with optical character recognition technology, efficiency is expected to improve further.
Longshore productivity already has improved substantially. This year, terminals at the ports have handled a 5 percent increase in cargo with fewer work gangs than last year. According to the PMA, the terminals in Los Angeles-Long Beach hired 36,268 longshore gangs in the four-week period through Aug. 6, compared with 37,600 gangs during the corresponding four-week period last year.
Terminal operators say that in addition to the changes in ILWU practices, improved rail operations have contributed to productivity. Last year, backups on railroads slowed the movement of import containers from marine terminals. That forced terminals to stack containers higher, requiring longshoremen to spend more time moving boxes around to find the right one.
"Things are not as confused in the yard as they were last year," said Ed DeNike, chief operating officer at SSA Marine. Terminals that last year were stacking 80 percent or more of their imports are now storing 40 to 50 percent of the containers on chassis. The result: More containers are ready to move out of the yards as soon as the truckers arrive.
The reduced congestion has allowed the PMA more flexibility in assigning longshore gangs and cargo-handling equipment. Last year, longshore labor shortages forced the PMA to limit the number of yard tractors the terminals could use to back up each dockside crane. This year there are no such restrictions.
McKenna added that the PMA has developed a measuring system that measures precisely how many longshoremen are working in each section of the terminals - at the gates, in the yards, at the on-dock railyards and against the vessels. The system sends out an alert if any sector begins to use a disproportionate share of labor, so that changes can be made quickly. "We have the right metrics now," McKenna said.
Port authorities also have contributed to the smoother flow of cargo. Last spring, they reduced from five days to four the amount of free time that shippers are allowed to store imported cargo at the docks before demurrage is charged. Terminal operators say the reduced storage time has kept the containers moving through the terminals, and has freed up more yard space for storing containers on chassis.
On July 23, the ports launched PierPass, the program under which trucks moving through terminal gates during weekday hours are charged $40 per TEU to help offset the cost of keeping terminals open on four weeknights and on Saturdays. More than 30 percent of the terminals' truck traffic now moves in the off-hours. That has relieved traffic jams during peak hours and enabled harbor truck drivers to carry more loads per shift by operating when freeways are less congested.
The terminals' purchases of additional container-handling equipment and the training of longshoremen to handle the machines has enabled the terminals to handle the additional demands of the extended gate hours under PierPass.
Shippers are pleased, but remain cautious. They want to make it through the two busiest months of the year before they declare this year's peak season a success. And they say there's still room for improvement.
Charley Kantz, vice president of logistics at Bakers Footwear Group, said he continues to see delays of up to a day in picking up its containers because some terminal operators will close a section of the terminal to truck traffic without warning. When that happens, the trucker must return the next day.
The problem, which has occurred on and off for years, results from safety issues, said Doug Tilden, chief executive of Marine Terminals Corp. When a longshore work gang assigned to the vessel is moving containers from the vessel to the terminal's container stacks, it is not safe for over-the-road truckers to compete for space with the longshore tractor drivers, Tilden said. "When the vessel gang is in the row, they own that row," he said.
Terminal operators must seek a long-term solution to this operational problem. Since the solution may require giving employers more flexibility to assign longshore labor to different sections of a terminal without regard to craft, it may have to await negotiation of the next PMA-ILWU contract in 2008.