California ports to face systemic challenges even after ILWU reaches deal MONTEREY, California — When the longshore contract negotiations are over and productivity has returned to normal, the CEOs of California’s container ports will face even greater challenges dealing with the problems that remain: handling big ships, adjusting to powerful carrier alliances and establishing a new chassis regime. “These are systemic problems,” Jon Slangerup, chief executive of the Port of Long Beach, told the annual conference of the California Trucking Association last weekend in Monterey. “Labor is frustrating it, but the entire system is fragmented, inefficient and silo-driven” he said. Slangerup was joined by Gene Seroka, executive director of the Port of Los Angeles, and Chris Lytle, executive director of the Port of Oakland, in calling for a new operating model for California’s ports, which together handle about 40 percent of U.S. containerized cargo. The old days of being landlord ports that build container facilities, collect rent and let terminal operators make all of the operating decisions are over. Seroka sees California’s ports adopting a hybrid model in which they will position themselves somewhere between the landlord ports they used to be and the operating ports that are prevalent today in the South Atlantic. The ports must work closely with the carrier alliances, terminal operators, trucking companies, railroads and cargo interests to improve efficiency. At times, the new model will require that the ports incentivize supply chain efficiencies, Seroka said. Slangerup added that big ports are in a unique position in which they can use their tariffs to offer financial incentives, or impose financial disincentives, to improve terminal efficiency and drive cargo velocity. The new model the port directors talked about will be built around information technology and managing data to connect overseas vessel stowage offices, shipping lines, marine terminals, freight intermediaries, truckers and railroads in a single loop. This inter-connectedness is crucial in handling the big ships that carriers will continue to deploy in the trans-Pacific trades, Lytle said. “Right now the terminals can’t react the way they need to for handling 10,000 vessel moves in three and a half days,” he said. Block stowage of containers on vessels in Asia for key inland destinations in the U.S. will begin the process. Filing this information and related data on the shipments with U.S. terminals and cargo interests before the vessels leave Asia is the next step. Terminals, customs brokers, truck and rail carriers must be prepared to process the information and move the containers as soon as the vessels arrive at the U.S. ports. Although this information is already out there, it is captured in silos rather than being shared with all members of the supply chain. Slangerup contrasted the fragmented supply chain from Asia to the U.S. marine terminal to inland distribution centers with the final leg of the transportation move that retailers control from the distribution centers to the store shelves, which he said is streamlined and expertly managed. The prize for carriers, terminals, truckers and cargo interests if they work with ports to improve the first leg of the supply chain will be to reduce transportation costs by 25 to 30 percent, Slangerup said. The cost reductions will occur through elimination of multiple handling of containers, a neutral chassis fleet that ends the split moves of containers and chassis that truckers must endure, “peeling off” large blocks of containers for a single destination when the containers are discharged from the vessel and much faster truck turn times in the ports. “Terminal efficiency and getting trucks into and out of the port is the number one issue. We hear it all the time,” Lytle said. An encouraging factor in developing this new business model is that the ports already have the authority they require from their filings with the Federal Maritime Commission to meet with their stakeholders, discuss operational changes and take actions that will drive efficiencies, Seroka said. “We can talk about everything that applies to efficiency,” he said.
Posted on: Tue, 20 Jan 2015 19:40:27 +0000
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