Why Do the Ports of Los Angeles/Long Beach Look like a Parking Lot? The 5-Minute Guide to Understanding the Congestion

Times when a three lane highway becomes one...

Unless you just started your first logistics job today, you’ve heard about the chaotic situation at the ports of LA/LB.  It’s a lot more likely that you have not only heard about it, but that you have felt its impact to your supply chain, budget, and sanity.

After enduring weeks of slow moving freight through West Coast ports, Trans-Pacific carriers have reinstated the initially rebuffed port congestion surcharge (PCS). The PCS will apply to all cargo that is in-gated at origin on or after November 26, 2014.

For the the latest on port congestion surcharge, please read Carriers Reinstate West Coast Port Congestion Surcharge Amidst Delayed ILWU/PMA Labor Talks.

What are the factors contributing to West Coast port delays?  This is where it gets complicated.  Between carrier, operational, and terminal issues, you have a plethora to choose from, depending on what position you’re defending.  In reality, it’s actually a combination of all three.

How?  Here’s the breakdown:

Carrier Issues
  • Larger vessels arriving with more cargo to load/unload at one time
  • Volume increase of about 5%
  • Alliances delivering freight on terminals throughout the port and confusion on where to pick up and deliver containers
  • Despite the alliances reducing the number of ships, vessels tend to all arrive within a short time span, as opposed to spread throughout the week
Operational Issues
  • A chassis shortage still exists
  • The chassis rental system requires additional time and moves per delivery, which further reduces the daily dray capacity
  • New Clean Air program requirements have reduced the number of available trucks
  • Driver compensation has been reduced because of congestion and this makes hiring additional drivers difficult
  • Lines, lines everywhere.  Lines at port, at the rail, and at the chassis pickup locations
Terminal Issues
  • Gate hours remain restricted
  • Union is not providing enough crews to effectively handle the larger vessels
  • Worker productivity has decreased significantly in terms of containers handled per hour
  • Automation of port tasks are being fought by the union as it threatens worker positions
  • Union is conducting additional safety checks on trucks and chassis arriving inside the port which further slows the process

Four significant actions must occur to restore the West Coast port efficiency:

  1. Labor issue must be resolved
  2. “Gray Pool” of chassis must be established
  3. Port must increase capacity dockside to increase the overall unloading/loading volume
  4. Automation must be instituted at all chokepoints to move trucks through gates at a faster pace

Hopefully you enjoyed my analysis.  I’d love hear what you think. Leave a comment below!

Love this blog?  Click here to subscribe with only your email address.

-- Uncle Larry
Chief Logistics Officer

Comments

  • Mark Barrett

    An excellent analysis indeed – what a mess. Although, I would have put “Carrier Issues” at the bottom, and the more prominent “Clean Air Requirements” and “Union non-productivity” at the top of the list……as usual. Yes we all need clean air but why can’t the green-people enact economically and logistically friendly initiatives, ever? And why do the union thugs continue to build walls between themselves and their paychecks? This is a broken-record port story.

  • Stanton R. Molton

    When I retired as a lonshoreman/craineoperator [LA/LB] my yearly average was 38 moves an hour @ Hanjin . I think it easy to speed truckers through, simple really! Management declined my idea.
    On a fishing trip to Cabo I asked the facility manager for a chance to change some loading procedures and I promised to do 1100 moves [empties] in 8 hours and I still think it can be done. Management declined saying “if it ain’t broke” etc.
    We’re not all thugs and in 40 years I never met one!

  • Liz

    Jeff we’re now in January 2015, I am still seeing the port impacts and delays I hear that the west coast ports will be closing or partially closing. Containers are still weeks behind who and where can we get up to the minute information obviously the media has not not been on top of these issues lately. Could you provide updates as of today? Liz

  • Shapiro

    Hello everyone,

    First I’d like to thank everyone for commenting! What great and insightful comments from all angles of the spectrum.

    Mark- Isn’t that the truth! It’s always difficult to create a solution when there are many parties affecting the outcome. Each has their own requirements and let’s face it, change is also difficult but often necessary to propel an industry forward.

    Stanton- We need more forward thinking people like you at the terminals! It’s hard to hear that there are union members with great ideas for increased productivity that aren’t being heard. I know we (Shapiro) make it a point to get the input of our employees to all areas of our business. Diversity breeds innovation. Stay in touch!

    Liz- We couldn’t agree more. The battle we see playing out in the media is more of a finger pointing battle so it can be a struggle to get a clear picture. At the moment, we can say that delays are not consistent across the board for all carriers. Some have longer or shorter wait times, due to terminal equipment or scale of the vessels themselves. Just the other day, the ports stopped unloading vessels to clear the backlog of containers. To get up to the minute information about what is happening, I would suggest two things:

    1. For large delays and emergency notices, subscribe to Shapiro’s Shap Flash (http://www2.shapiro.com/emailPreference/e/24402) we send out messages based on urgency .
    2. For live time information, I suggest following informative accounts on Twitter such as us (@shapiroco), the Journal of Commerce (@JOC_Updates) and their main editorial contacts such as Mark Szakonyi (@Szakonyi_JOC), and some key hashtags (#ILWU, #PMA, #supplychain)

    I would like to thank everyone again for commenting and creating a lively discussion around the topic.

    Jeff Knapp

  • Rachel

    Hi Jeff, I really found this article informative. It brought me comfort on an issue I’ve been annually stressed about. I’ve heard that possibly they may have resolved the chassis issue about repairs and such. I saw the previous commenter mention that the port could be closing?

  • Gary Ferrulli

    Good job, crisp, concise. Unfortunately the issue aren’t, they are complex and will actually get worse before they get better. The agreement between PMA and ILWU will be for three years, coinciding with the ILA contract on the US East Coast and Gulf. Same time Obama Care taxes on Cadillac health insurance kicks in and estimates are that ILWU alone at about $50. Million a year and they did NOT settle this, they kicked it down the road (3 years). So three years from now could be far worse if all coasts are locked up in “negotiations” they really aren’t negotiations, one side has a monopoly. And then the politicians stay as far away from it as they did this time.

  • Shapiro

    Hello everyone,

    Looks like more information is being released in the media as the battle rages. The contract has been extended to 5 years at the moment, Gary. So maybe a few more years of calm before the issue arises again.

    Rachel, it’s very complex. There has already been a shut down this past weekend (2/7-8) however, the fate of a lockout is still up in the air. Just know that if ports are shut down, President Obama has the right to enact Taft Hartley which forces an 80-day cooling off period.

    Waiting with bated breath,

    Jeff Knapp

  • Chris

    HiJeff,
    Thanks for your article. Obviously it is written from a US point of view, and it provides background for those of us who live halfway around the world, and are feeling the effects. Our port in Auckland , New Zealand is currently suffering from untimely vessel arrivals caused by delays on the West Coast. Given the very small size of New Zealand compared to other countries and their Ports I am sure that this is no longer a US problem. Delays of this nature have a habit of compounding and reaching into corners all around the world.

    Thanks for giving us the background in a nice succinct manner.