On any given day you can find some 40,000 pounds of Californian citrus sitting for up to a month in a truck yard, miles from the port of Los Angeles or Long Beach. Southern California houses a multimillion dollar industry employing tens of thousands of workers; an industry that’s under assault from the container crunch.
According to a recent study by the National Retail Federation and National Association of Manufacturers, West Coast ports contribute a whopping $2 billion a day to the American economy. Even so, congestion is beginning to have ripple effects throughout the system. The growing purchasing might of Asian countries, and China in particular, is causing an acute kink in the chain that the trucking industry can feel.
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Where The Problems Lie
Congestion bottlenecks in Long Beach and Los Angeles are resulting in increased costs for businesses throughout the region. Many are resorting to shipping goods by air or reroute shipments to other ports. In some cases they are even having to cut hours and head counts to account for losses.
Analysts point to a number of causes, from bigger ships hauling more goods in a single trip to the recent battles between International Longshore and Warehouse Union members and the terminal operators they work for. The trucking employment squeeze doesn’t help, as some point to a lack of trailers to take the goods once they arrive.
As the shipping industry consolidates, companies are forced to form alliances and load a patchwork of cargo into a single massive ship. When cargo no longer comes into designated terminals on small vessels, truckers have a hard time finding the right containers to haul to businesses.
The congestion is having a tangible impact on business operations. One vendor, who had five containers filled with citrus, waited helpless as their produce sat delayed along with dozens of other ships anchored at sea. Their only two options were stark: either take the fruit off the ship and try to sell it locally or let it rot.
Big Ships Mean Big Problems
With new alliances being formed by major ocean carriers, goods are now transported on huge megaships. Ships carrying 8,000 containers used to be considered the big dogs, but now vessels are able to carry up to 14,000 containers. The recent work on the Panama Canal, designed to increase capacity, is testament to this fact.
Some estimate that over the next few years ships will be able to carry up to 18,000 containers. Confusion is created because it’s difficult to determine where the cargo needs to go. When more than one company is using a megaship to transport goods bound for different destinations, it’s difficult to unload them as quickly as possible.
Where before truckers were used to seeing ships with the same containers, now the loads are all over the place. In many cases there’s no rhyme or reason to how the containers are loaded. While port officials are creating more organized methods for keeping track of where the containers are and where they need to go, problems remain.
Port of Los Angeles officials recently launched the Peel Off program, which creates a pipeline for containers from major customers to be moved to a specific area where truckers can quickly identify, collect, and haul the containers to inland distribution centers.
An Argument for Technology
Some companies are creating technological solutions to address the container bottleneck. As it is in other areas of trucking, advanced technology is being looked at as a viable solution to supply chain problems.
One company has created a mobile app that alerts truckers when a container is available. The app provides information regarding the container and potential pick up times. This way shippers and carriers of all sizes can maximize efficiency gains that before were only available for the biggest shippers.
Although some companies may be reluctant to share proprietary data, interoperability between shippers and carriers is crucial to maintaining a smoothly flowing global supply chain. Truckers, ocean carriers, and marine terminals need to know when transactions are taking place.
Looking for Loads
When truckers have to chase their chassis, companies lose. Since congestion has made it tough to move freight in a timely manner, fees that were previously meant to prevent importers from holding onto equipment are hitting businesses where it hurts.
Every day that a refrigerated container sits in a yard, huge per diem costs mount. Keeping the container on a trailer chassis without moving it racks up the cost.
Although the two ports are working on a fleet of pooled chassis that allows truck drivers to use trailers interchangeably, problems persist. Meanwhile, trucking companies are taking matters into their own hands by leasing long-term or declaring “force majeure,” a legal term that defines an instance when an outside force makes it difficult to fulfill a contract.
In the end, it’s hit or miss. If carriers don’t fight the fees, then the cost is passed on to the cargo owners, the Krogers and Targets of the country. What that ultimately means is that container congestion ends up with the average consumer paying more.