Port Congestion

1. Port Congestion McKenzie Schwitzer Kaleigh Martens Justin Beckman Yong Sun Yoo

2. Introduction to Port Congestion

3. The Causes of Port Congestion are Many and Varied • Increased Demand for Container Shipping • Port Constraints • Poor Management • Strikes and other work related problems • Too many vessels are being directed at a port • The construction of the vessel • How containers are loaded and unloaded • Scheduling • Truck driver shortage • Pollution • Major influencing retailers on congestion

4. Increases in Demand for Container Shipping • Increases in International Business over the past years has created more demand for ocean shipping • Cost savings from cheaper labor, lower cost of resources, operating efficiency, and increased global promotion of trade with trade agreements like NAFTA • Important to many companies to remain in a competitive market

5. Constraints on Port Capacity • Problems with limited location • Too many vessels are being directed at a port and the port has to service all types of vessels • The construction of the vessel also has a lot to do with the way containers are loaded and offloaded on to the vessel • The general size of shipyard • Demand for service • Infrastructure and inland transportation

6. Poor Management • Poor management and planning is another factor that leads to delays and backlogs • There is a high turnover of management at the container terminal • Casual workers • Workers that are casual they do not receive substantial employment benefits • no training and lack of experience

7. Ship Size • Benefits of larger ships • Able to carry more cargo • Economies of scale • Universal containers • Problems with ship size • The ship travel speed • There is limited port usage • Terminal size • Water depth • Port equipment-larger cranes • scheduling problems

8. Truck Driver Shortage • Hard to find drivers • Low rate of pay • Rate of turnover is more than 100% • Long hours and weekend work • Traffic tie-ups • Delays on highways because of congestion and bottlenecks on highways cost the trucking industry an estimated $7.8 billion in 2004 • Truck driver shortage • There are not a sufficient amount of truck drivers to drive the trucks after the shipments have been delivered to the ports

9. West Coast Port Congestion • Dramatic increase in imports from Asia • Due to cheaper labor = cheaper product • Labor Shortages when unloading ports

10. Labor Problems with West Coast • International Longshore & Warehouse Union members & tentative contracts • Slowed down their work • Not enough people are working late shifts • Most people are being overworked whether they work at the terminal or drive a truck • Aren’t enough drivers to drive the trucks once products are brought into the port • Aren’t enough rail lines either • Forces major delays & problems of not having products when needing them

11. Problems with PortsPollution • Cargo ships using heavy bunker fuel • Diesel powered trucks • People living under the smog near LA & LB ports tend to have respiratory & cardiovascular problems

12. Problems with Port Pollution • International Longshore & Warehouse Union (ILWU) has launched a campaign to clean up the air pollution • Want to have ships reduce harmful emissions by reducing idling times • Wants cleaner fuels for terminal equipment • Wants 20% reduction of ship pollutants by 2010 • Shipping companies & terminals have said they are working hard to help

13. Electronic Truck ID • 2003 – Long Beach introduced a new wireless truck ID system • Increase safety, security, & efficiency • Immediately transmits information as soon as a truck pulls into a marine terminal & is supposed to reduce time trucks are there to pick up or drop off containerized cargo • Will help reduce emissions created by idling trucks as well

14. Offpeak Program • Began in July of 2005 due to port congestion on the West coast & the 40% increase in imports between 2000 & 2004 • Helping to move more activity from both ports from conventional business hours to off hours • Any shipper who moves cargo between 3AM-6PM is assessed an $80 TMF (40ft. Container) & a $40 TMF (20 ft. Container) on Monday-Friday. No fees for shipments outside these hours. • Also doing this to reduce smog during normal business hours

15. Offpeak Program • Paul Sherer (spokesman for Offpeak) has said that a 1/3 of the shippers have moved to off hours. • Truck drivers enjoy this because they are now able to make more runs during the day • More than 1 million trucks trips have been diverted from peak daytime shipment to offpeak

16. Diversion of Cargo • Due to high container growth, tight capacity & rising fuel costs at LA and LB shippers and carriers are being routed to other ports • Most shippers & carriers are re-routing to the East coast, but some are going to Northern California ports • LA and LB had previously handled 40% of all imports from Asia

17. Major influencing retailers on Congestion • Walmart--- sell highest volume of products. • Loss of business devastating during the Christmas holidays. • Build Distribution Centers allowing to ship through canals to avoid Pacific Coast Ports. • Home Depot has also adopted this strategy as a retailer. • Sears is an example of a retailer who has shipped to the east coast ports to avoid congestion problems in the west. • Problems for retailers all centers around Just in Time Inventory

18. Problems for Just In Time Inventory • If products have to sit for 4 to 7 days this may result in loss of business. • Sitting at ports results in large warehouse costs for retailers • It also costs ship owners a large amount of money to have their assets sitting loaded at ports. (Turnaround time is poor)

19. More problems tied to Just in Time Inventory • Example • The Union Pacific Railroad • Loosing half of their employees due to retirement • Many containers are being loaded onto railcars • Hiring new employees results in high training costs in order to have a effective and efficient workforce

20. Port of New York/New Jersey • Ability to improve capacity of port by: • Dredging (most terminals to 45 feet) • Larger vessels to call at the port (for this to be effective ports must remain congestion free) • This leads to more capacity for ships • Reconfiguration of the port terminals • Virtual inspection system (allows quicker movement through the gate • Ability to weigh and take pictures of trucks • Expansion of physical infrastructure • Faster more efficient movement of goods • Additions of new cranes and other equipment to improve efficiency

21. Port of New York/New Jersey(continued) • Dramatic reduction in turnaround time for trucks • Reduction from 6 hrs in 2004 to around one or one and half hours in 2005 • The completion of a new ExpressRail terminal in Elizabeth • Provides on-dock or near-dock service at the terminals • Containers are easily put on trains within the terminal or just outside of • 2nd part is creation of a storage facility allowing the number of trains serving the port to increase

22. Statistics of East Coast Ports • 16.2 billion TEU’s on the West Coast • 11.8 billion TEU’s for the Top six container ports in the East. (NY/NJ, Charleston, Hampton Rds, Savanna, Miami, and Montreal) • Container volume on the East coast only exception being NY/NJ has been measured and the ability to scale growth initiatives to meet demand.

23. Relieve Port Congestion • Port Development • Expand capacity: New port, Dredge • Expensive, time-consuming, environmental problem • Extended Gate Hours • Allows use of roadway capacity during off-commute hours.

24. Relieve Port Congestion • Congestion Pricing • Deter use of port, roadway, and rail capacity during peak traffic hours • Freight can move more quickly without causing so much friction with the urban environment • e.g. PierPASS program • Off-Dock Container Yard • Allowing container storage dwell time to be split across more facilities

25. Relieve Port Congestion • Expanded Rail Connections • Expanding rail connectivity, including rail operating yards, mainline access tracks, and switching and routing tracks • Allow more efficient placement of railcar resources against demand, and more efficient train movement across the entire system • Fast Rail Shuttles • Deployment of rapid inland rail shuttles, moving containers between the port area and inland rail complexes • Reconsolidation and distribution can be done more efficiently than in the tight confines of the port

26. Relieve Port Congestion • High-Speed Gates • Automated high-speed gates that rely on optical character recognition, digital imaging, and other technologies to speed truck processing and integrate truck/terminal operations • Speed truck movement and make off-peak truck movement more effective and economical • Integrated Maritime and Rail Movement • Tighten the linkage between the maritime movement and the rail movement • Rail cars can be made available when containers are ready, and containers are ready to move when rail equipment is in place.

27. Sources • Thomas Ward, Port Congestion Relief:Attacking the Entire Chain, JWD Group, a division of DMJM Harris (http://www.dmjmharris.com/media/4437.pdf) • Patrick Alderton, Port Management and Operations, LLP, 2005

28. Works Cited Armbruster, William “Polishing the Apple” Traffic World 24 October 2005: 20-26. Broder, John. M. “ At Nations Ports, Cargo Backlog Raising Question of Security.” New York Times 27 July 2004: 12. D’Innocenzion, Anne “Cargo Backup to affect holidays”- Toys, other items stuck in two ports. Chicago Tribune 15 November 2004: 1. Dougherty, Geoff “New Routes For Freight.” – Alternative shippers move full stream ahead find other ways to move freight. That’s boosting some all-water shipping services and or air cargo volume, spurring new rail networks. Chicago Tribune 27 June 2005: 1.

29. “Electronic Truck ID for West Coast Ports.” December 2003. http://www.caltradereport.com/eWebPages/front-page-1071171246.html. Guido, Daniel W. “ With So. Calif. Ports Jammed, Others Jockey to Gain Overflow.” Transport Topics 30 May 2005: 11-12. Hays, Constance L. “US Retailers Feel the Pinch of Cargo Caught in Transit Snags.” New York Times 26 October 2004: 1. Johnson, Eric. “Ports’ Pollution Outpaces Politics.” Region Growing Ship Traffic Exacerbates Problem- Policy Progress Slow, Long Beach Press 27 February 2005: A1. MonGelluzzo, Bill “LA-LB Reports Volume Gain.” Traffic World 31 October 2005: 39. O’Reilly, Joseph “East Side Story: Oceans New Direction” June 2005 Inbound Logistics 22February 2006 <http://www.inboundlogistics.com/articles/features/0605_feature01.shtml White, Ronald, D “US Ports Stormed by Wave of Imports”- Cargo Container Traffic “Shipping’s Dirty Cargo.” March 2006. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/03/04/BUGCQHIA0D1.DTL&hw=port&sn=003&sc=617.  Swells to Record, Raising New Concerns about Congestion. Chicago Tribune 6 February 2006: 1. “West Coast Port Congestion Addressed with OffPeak Program.” January 2006. http://www.recyclingtoday.com/news/news.asp?ID=8984&SubCatID=12&CatID=3. “West Coast Cargo Flow Recovers.” August 2005. http://www.labournet.net/docks2/9908/recover.htm.

30. Sources • http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/03/04/BUGCQHIA0D1.DTL&hw=port&sn=003&sc=617