East Coast Ports Benefited from West Coast Cargo Diversions
In a sign of how bad the port congestion problem grew on the West Coast this January, East Coast ports ended up handling 45 percent of the cargo-container traffic that entered the United States, up from 36 percent during the same month last year.
Normally, the West Coast ports would have handled about 64 percent of all container traffic in January, but that dipped to 55 percent.
“Importers and exporters are reviewing their supply-chain plans for the future and not necessarily in favor of the West Coast, said Hackett Associates founder Ben Hackett, who prepares the monthly “Global Port Tracker” report for the National Retail Federation.
A crippling work slowdown on the West Coast was resolved when a tentative agreement was reached Feb. 20 between the International Longshore and Warehouse Union and the longshore workers’ employers, the Pacific Maritime Association—made up of shipping lines and port terminal operators. But some 25 cargo-container ships are still stuck at anchor waiting for a berth to unload their merchandise at either the Port of Los Angeles or the Port of Long Beach.
Many importers are balancing the pros and cons of shipping goods from Asia to the West Coast or the East Coast. Hackett said sending ships to the East Coast is more expensive because it takes longer and results in higher expenses to move the cargo to Midwest distribution centers by rail or truck. Also, importers have significant investments in West Coast distribution centers that can’t be easily abandoned. In addition, a large number of consumers live on the West Coast.
But congestion problems persist at ports in Long Beach and Los Angeles. There is still a chassis-shortage problem that has not been completely resolved, even though a new program went into effect March 1 to make it easier to find chassis—the wheeled vehicles used to transport containers.
To relieve cargo build-ups, the Port of Los Angeles announced it has started a special program where cargo owners can move their containers through a special “peel-off” yard in less than 48 hours.
The port established a 17-acre “peel-off” yard open six days a week from 7 a.m. to 3 a.m. at Navy Way and Reeves Avenue on port property. The yard can handle as many as 500 cargo containers but could grow to accommodate 650 containers and operate around the clock.
Under the “peel-off” program, import containers belonging to high-volume shippers are stacked together in a block when they arrive at the port. Then the terminals expedite trucks through the gates to pick up the containers and deliver them to the near-dock yard, less than one mile away, where they are sorted.
Undertaking operations of the yard are stevedoring company The Pasha Group, harbor trucking firm Total Transportation Services Inc., several marine container terminal operators and a core group of major retailers. TTSI has leased 250 chassis to ensure containers have wheels to roll.
The parties are also coordinating their efforts with the new interchangeable “gray” chassis pool, launched March 1 at both the Port of Los Angeles and the Port of Long Beach, where chassis can be picked up and dropped off at any of the 12 cargo-container terminals at the two ports.
No specific cost for the “peel-off” program at the Port of Los Angeles has been given, but terminal operators said it is a small differential that can be made up by the rapid deployment of cargo.
Because of the port congestion problems on the West Coast, cargo-container volumes at the nation’s major ports dropped considerably in January due to less cargo movement on the West Coast. According to the “Global Port Tracker” report, January’s volume of 1.24 million 20-foot containers slipped 9.5 percent from the same month in 2014.
February cargo-container volumes fared better with an estimated 1.27 million cargo containers coming through U.S. ports, up 2.3 percent from the previous year. March will see cargo volumes surge, rising nearly 17 percent to 1.52 million containers.
For the first half of 2015, cargo volumes will increase 4.5 percent over last year to 8.7 million containers.