December’s JOC Port Performance North America Conference in Iselin, New Jersey, highlighted the continuing — some would say perpetual — problems of port congestion and inefficiency along with the structural difficulties of changing well-established practices in the face of chronic container shipping overcapacity. Amid the gloom, however, were some bright rays of light that indicate progress is possible even under these adverse conditions.
Container carriers’ structural overcapacity and its attendant red ink is inevitably putting downward pressure on all downstream players in the supply chain. Port terminals are in the most vulnerable spot, as the concentration of volume into just a few large alliances is turning their negotiations with the carriers into an all-or-nothing affair they can’t afford to lose. The carriers are putting fierce pressure on the terminals to reduce rates, even though the carriers’ introduction of mega-ships has necessitated huge investments and actually raised operating costs.
Chassis providers and drayage operators provide another good example of the persistence of old, non-productive industry practice. Although the steamship lines nominally exited the business of providing chassis more than five years ago, they persist in bundling chassis provision into some of their rate offerings, generating tremendous complexity in the system. Clearly, all would be better off if the carriers completed their exit from this aspect of the business and allowed new systems to emerge in total.
But such an exit is impossible right now. Shippers are accustomed to the provision of “free” chassis bundled with their ocean transportation, and no carrier is willing to force the change, given the likelihood that it will lose that customer to a hungry competitor who is more than happy to perpetuate the practice for the time being in order to help fill its mega-ship.
Despite this quagmire, the conference also showed that progress is still possible. Another chronic area of friction in the ports has been the amount of time required for truckers to get in and out of the terminal. There hasn’t even been agreement on what should be measured, with terminals often measuring the in-gate to out-gate times, while truckers (rightfully) also want to count the time spent waiting in line to get inside. There isn’t agreement on the facts, so forward progress is impeded.
Enter the Port of Oakland and the new drayage smartphone apps that have been created at its behest by Leidos. Titled “Dray-Q” and “Dray-Link,” these apps, available for free download, utilize a combination of Bluetooth, WiFi, and GPS to provide a real-time view of what’s happening at the port. Springboarding from the smartphones already in every trucker’s pocket, the apps provide a complete picture of the operation, including current wait times at various gates and backups within the terminal.
There are two important benefits. First, the trucker has a good idea of the status of terminal operations, which can be used to optimize current operations and maximize productivity. Forewarned of long lines at the gate, a trucker might elect to postpone a visit to the port, slotting in another local move while the in-gate line shortens.
Importantly, the app also provides all participants with a common understanding of the current reality of operations in the Port of Oakland and a good measuring stick to determine whether changes result in improvement. You can’t know which way to head until you know where you are. Too many port terminals are afraid of accurate data because it will reveal the true nature of their operational shortcomings. But an accurate understanding of reality by all the involved parties is a prerequisite for progress.
That’s what makes the actions of the Port of Oakland commendable. It’s willing to stick its neck out to improve things. Progress is possible even under the current adverse conditions. It just requires some courage and creativity.
Lawrence J. Gross is president of Gross Transportation Consulting in Mahwah, New Jersey, and a partner at FTR Transportation Intelligence. A veteran with 34 years in the transportation business, he covers freight transportation, concentrating on the intermodal and trucking sectors from a transportation and equipment perspective. He is a frequent speaker at industry events. Contact him at email@example.com and follow him on Twitter: @intermodalist.