How Are Apparel Importers Adjusting Their Strategies for the Next Big Shipping Season?

Late last year, Ram Kundani waited as long as seven weeks to extract his cargo containers filled with printed dresses, lace tops and distressed denim pants from the congested ports of Los Angeles and Long Beach.

Many of his apparel shipments didn’t make it in time for the make-or-break holiday season, costing his company more than $500,000 in lost sales. This year, hoping not to be burned again, he is bringing his apparel import in a little earlier than normal.

“We used to add an extra three or four days for our merchandise to clear. Now we are adding up to 10 days to two weeks just in case,” said Kundani, executive vice president at B. Boston & Associates, a decades-old Los Angeles apparel company whose labels include Sloane Rouge and Stilletto’s. “The reason is even though the situation has improved a lot at the ports, we think the chassis problem is still there. So once it gets to be the busy season, we think it [the port congestion problem] will hit again.”

Kundani is just one of hundreds of apparel importers recalibrating their logistics plans before the next big shipping season hits in July. Many apparel importers were pummeled when clothing and accessories coming from factories in China, Vietnam, Indonesia, India and Bangladesh were piled high on boats stuck off the coast of Southern California waiting in line to dock at the Port of Los Angeles or the Port of Long Beach. While some ships went straight to berths, depending on the terminal, some waited as long as 22 days on the ocean before sinking their anchor to unload, according to Capt. Kip Louttit, executive director of the Marine Exchange of Southern California.

At its worst, there were 28 cargo-container ships lined up beyond the ports’ breakwater on March 14. After a tentative contract agreement between longshore workers and their employers was reached on Feb. 20, dockside workers who had been working slowly during labor negotiations amped up their schedules to clear the backlog at the two ports, which account for 40 percent of all the cargo-container traffic that comes into the United States.

As of May 11, there were no cargo-container vessels anchored beyond the port breakwater.

Stay West

With the ports nearing normality, many apparel importers said they are planning to continue to use the Port of Los Angeles and the Port of Long Beach as their entry points because so many warehouses, distribution centers and railroad infrastructures are located in Southern California.

“Most people who are using the West Coast are continuing to use it,” said Debra Taylor, a customs broker for Alba Wheels Up.

She pointed out that the Port of New York and New Jersey recently experienced its own set of congestion problems with trucks backed up for miles onto the New Jersey Turnpike as they waited to pick up cargo at the GCT Bayonne terminal.

Indeed, the East Coast ports saw a surge of shipments late last year and early this year. In December, container volumes on the East Coast were up 11.5 percent from the previous year, and they inched up 7.6 percent during the first two months of this year, according to the “2015 North America Ports & Logistics Annual Report,” prepared by CBRE Research.

But that surge of cargo may be temporary. “The degree to which East Coast ports can benefit over the long term is limited, however, as the majority of the cargo that travels through the West Coast ports remains within the region—85 percent in Northern California and 60 percent in Southern California,” the report said.

Ben Hackett, who writes the “Global Port Tracker” report for the National Retail Federation, said there was a surge of all-water shipments to the East Coast from mid-December to the end of February. But shipping activity is returning to the West Coast. “There is so much money sunk into the distribution centers and facilities on the West Coast that companies are not making a change unless they have to,” he said.

That was reiterated by one major apparel importer that brings in at least 15,000 containers a year to the ports of Los Angeles and Long Beach. During the height of the port congestion problem, the company monitored terminals’ efficiency, switching its cargo to terminals working the fastest.

The company also trained a number of its own trucker drivers to pull cargo containers from inside the terminal gates and leased dozens of chassis kept in its yard to make sure there was no shortage of wheels. “I think we are going to toe the line and take the same strategy we had starting last year,” said the company’s logistics and transportation director, who wished to remain anonymous. “We feel good about the strategies and that the worst is behind us until the next labor strike.”

Walmart has apparently upped its cargo-container traffic moving through the Port of Lázaro Cárdenas in Mexico, starting to transport more than 150 containers a week from the Pacific Ocean port to Houston via the Kansas City Southern rail network, said Erik Bo Hansen, vice president of KCS’s intermodal sales and marketing.

While apparel importers are relieved to hear that a new five-year contract has been worked out between West Coast longshore workers and their employers, the next challenge has been the lingering chassis-shortage problem.

On March 1, the Port of Long Beach and the Port of Los Angeles started operating a “gray” chassis pool. Under this system, truckers can pick up and drop off chassis at any of the 12 cargo-container terminals at the two ports.

Before the “gray” chassis pool was formed, chassis were divided up into different pools run by three leasing companies and had to be returned to those pools, making it hard to get chassis at certain terminals. Those three chassis leasing companies are Trac Intermodal, Flexi-Van Leasing Inc. and Direct ChassisLink Inc.

Now the “gray” chassis pool is one big chassis pool in a cooperative-agreement program between the three leasing companies, which control 80,000 of the 100,000 chassis at the Los Angeles/Long Beach port complex.

The chassis-pool managers are hoping West Coast Chassis Pool, operated by shipping line SSA Marine, comes into the program with its 15,000 chassis.

The major trucking companies that collect cargo from the two ports said the chassis situation has improved rapidly. “We haven’t had any chassis problems,” said Bob Curry Sr., president and chief executive of California Cartage Co., which operates a fleet of 1,500 trucks nationwide and owns three warehouse brands. “And I don’t anticipate any chassis problems in the future.”