One of the major takeaways from this year’s TPM Conference in Long Beach was that global supply chain volatility and uncertainty continue to pressure beneficial cargo owners to demand best practices from their freight transportation stakeholders. The operating models at a majority of container ports don’t provide a sustainable strategy to meet these critical demands. It’s time for ports to consider implementing best practices.
I was fortunate to be one of three panelists on a TPM session entitled “From the Port to the DC and Beyond: Making the Connection Work.” The topic appeared to have a high priority on attendees’ agendas considering the session was standing room only. When I began to reflect on my experience in preparation for the panel discussion, I realized I have been involved with port-of-entry goods movement issues for more than 35 years. My journey started as an importer that used six major U.S. container ports, then as president of a port-of-entry third-party logistics provider focusing on drayage and deconsolidation, and now as a global supply chain adviser to importers, ports, marine terminals, railroads and 3PLs.
After sitting in on an excellent “Prince Rupert, a Model for Cooperation That Benefits Supply Chains” session and a case study about “Choosing the Right Port Gateways” with insights on the business models at the Port of Savannah and Northwest Seaport Alliance (Seattle, Tacoma), I began asking myself, “What are the fundamentals for container port best practices. Here is a partial list of my thoughts:
- Ports should be more than just sensitive to their typical heavy-politics culture. Their organizational culture should be a blend of politics, continuous improvement, external focus and innovation. They might want to take some organizational culture tips from Alan Mulally, CEO of the year in the U.S. and No. 3 on Fortune magazine's 50 greatest leaders in the world (2014), who successfully changed Ford Motors’ culture.
- Modify the port container demurrage tariff to avoid BCOs storing containers on terminal land that sometimes costs up to $250,000 per acre. This change would provide critical space for marine terminals to better handle mega-vessels.
- Extend marine terminal landside operations closer to 24/7 operations.
- Provide assignments to port staff attending TPM, RILA and other important trade conferences to secure answers to critical questions, such as BCOs’ latest port challenges and priority elements in global supply chain strategies. Staff should present post-conference executive debriefings to port executive teams to keep them informed on continuously changing global supply market dynamics.
- Hire and listen to suggestions from non-port freight transportation executives, including marine terminal operators, BCOs and 3PLs.
- Modify the PierPass program, which was initially designed to incentivize BCOs to use Los Angeles-Long Beach terminal gates during off-peak nighttime hours, to a lower flat fee on all containers. This would enable drayage operators to utilize drayage capacity during daytime hours when it’s available.
- Support a local global supply chain educational program to improve port-of-entry goods movement stakeholders’ knowledge and understanding of operations interfaces.
- Develop a one-stop-shop customer communication center that provides the status of goods movement and resource information at the port of entry.
- Conduct periodic customer surveys to help increase understanding of global supply chain market dynamics among port staffs.
- Collaborate with local universities that focus on global supply chain programs to keep informed on the latest market dynamics and best practices. Hold quarterly meetings with port staff to educate them.
- Emphasis should be on goods movement enterprises outside the port to get a feel for what the customers of the shipping lines and terminals think of the service provided. Shipping lines and terminals often seem to think their responsibility ends when they tell the shipper the container is ready for pickup. Communicate these concerns to the shipping lines and the terminals. The ports should act like an ombudsman between the port operations and the goods movement stakeholders who use the port or rely on the port for the success of their business.
- Work with local economic development groups to communicate a compelling port-of-entry goods movement message. Too often it seems that the San Pedro Bay ports are on the defensive and not communicating their competitive advantage.
- Conduct benchmarking studies that include competitive metrics to better understand a port’s strengths and challenges.
A quote by John Maynard Keyes, one of the most influential economists of the 20th century, seems to describe today’s port challenges, “The difficulty lies not in developing new ideas as in escaping from old ones.”
Jon DeCesare is president of World Class Logistics Consulting in Long Beach. Contact him at 310-963-6172 or email@example.com.