Port of LA-LB Chassis Shortages Impacting Drayage Operations

Ocean carriers, terminal operators, and truckers in Los Angeles-Long Beach are contending with chassis shortages and hurdles in returning empty containers to the terminals, creating a logistical nightmare for shippers and putting them on the hook for detention charges because of late returns of equipment.

While these two related issues are present to various degrees at other gateways, the problems are magnified in the largest US port complex, where peak-season volumes now being handled at the 12 container terminals are contributing to an annual volume of more than 16 million TEU. The shifting of equipment over a dozen container terminals makes the logistics of securing chassis and returning empty containers exceptionally complex.

"It's out of control," said a drayage company executive. Harbor truckers feel especially aggrieved when equipment issues arise. They say they are last in the pecking order of a supply chain in which the beneficial cargo owners (BCOs), carriers, terminal operators, and intermodal equipment providers (IEPs) each do what is best for their industry without regard to the impact on drayage companies and their drivers.

The terminal congestion that results from the chassis dislocations and inability to return empty containers is causing truckers to miss their appointment windows and is significantly reducing the number of dual transactions the drivers can make, said Weston LaBar, CEO of the Harbor Trucking Association. Five years ago, 80 percent of the truck trips involved the delivery of an export load or return of an empty container coupled with the pickup of an import load. The number of dual transactions today is down to about 20 percent. "We have two truckers doing what one trucker can do," he said.

All sectors of the supply chain agree that the logistics problems went from difficult to worse on April 1, 2017, when carriers reduced their four vessel-sharing alliances to three, with more carriers in each alliance. For Los Angeles-Long Beach, where a number of the carriers still have a corporate or investment connection with the terminals, that means the members of a single alliance must position chassis or return empty containers to three or more terminals.

Los Angeles-Long Beach is unlike any other port in the country because vessels discharge 80-100 percent of the containers from each call in Southern California before proceeding to Oakland and returning to Asia. The cargo surges keep growing with the size of the vessels, said Gene Seroka, executive director of the Port of Los Angeles. He told the Harbor Association of Industry and Commerce on Sept. 27 that a record was established at APM Terminals when three 13,000-TEU vessels were handled simultaneously, with one of the ships exchanging a 24,800-TEU container.

When a terminal gets hit with a cargo surge of that magnitude, the operator often has no choice but to deny receipt of any more empty containers until it is able to make room in the yard by loading the empties and export loads onto the vessel. The terminal operator is inconvenienced by these surges. The scattering of containers and empties across multiple terminals was intensified by last year's alliance reconfiguration, and the effects of carrier mergers in recent years is adding to the complexity in large port complexes such as Los Angeles-Long Beach. The April 1 start this year of Ocean Network Express resulted in the three Japanese lines, each with its own terminal, attempting to fulfill its volume commitments to the terminals and the ports. Cosco Shipping's acquisitions of China Shipping Container Line and OOCL are likewise resulting in the scattering of empty containers and equipment among several terminals on a weekly basis.

While the logistics problems resulting from this consolidation of carriers and alliances is costly for the terminals, it is creating a host of problems for truckers, especially when the terminals shut off the return of empty containers.  

The port complex is turning to software solutions, such as a more robust exchange of information through the port information portal under development at the ports in cooperation with GE Transportation, and the increasing use of trucker appointment systems to manage truck flow at the terminals.

Source: Journal of Commerce