Ache at the gate
Port drayage becomes pain point for international supply chains.
Cargo shippers are worried about whether West Coast marine terminal operators and the International Longshore Workers Union will agree on a new labor contract this summer in time to prevent any work stoppages, and some are making contingency plans to route cargo through other ports in case of a disruption.
But switching to another port may not be a panacea if events of the past few months are any indicator. Shippers
have experienced delays getting products in and out of major ports on both coasts because of service issues faced by their trucking providers.
Motor carriers are increasingly restless about their limited earning potential as it becomes more difficult to drop off a box and pick up an outbound load in a timely manner, culminating with a driver strike in the Canadian port of Vancouver. In some ports, truck drivers often spend an hour or more waiting in line at the terminal gate and at least another hour completing a double transaction. Port productivity problems generally are occurring on the backside of the terminal, freight industry officials say. Vessels are being worked fairly efficiently, but terminals often do not appear to be putting enough resources or attention toward moving containers in and out of the yard, they say.
Operational inefficiencies have been magnified in some cases by technology problems and severe winter weather in many areas that often halted port operations, and made it difficult for railroads and motor carriers to operate at normal levels. The resulting container backlogs took days or weeks to draw down.
Many of the challenges faced by the drayage community and its customers are similar around the nation, but circumstances also differ by port.
Fifteen years ago, most terminals were wheeled operations with boxes stored on a chassis in the container yard waiting for a dray truck to simply hook up and go. Now, boxes are stacked on the ground four to five high to conserve valuable space and require a “live lift” by cargo handling equipment, which means truckers have to wait until the box they are picking up can be dug out of the pile and placed on their chassis. Drivers also lose 30 minutes or more every time they have to go to a separate off-dock chassis storage location to get a chassis from the leasing company that has arrangements with the shipper or ocean carrier, and another 30 minutes to return it. And terminals tend to have different processes for processing chassis, which creates extra idling and excess mileage. Drivers can experience further delays waiting for chassis defects to be fixed before they are allowed to exit a terminal.
Nationally, drayage delays are costing businesses $348 million, 14 million lost hours, nine million gallons of diesel and 103,000 tons of greenhouse gases per year, according to the Tioga Group, which has published several studies of the problem since 2011.
About 5 percent of all transactions get trouble tickets, which add about an hour per move and about $50 to the cost, Tioga estimates. Problems typically are the result of ocean carriers and customers providing incomplete information to each other about the container requirements and status, glitches in terminal operating systems, or mistakes by inexperienced drivers such as having inadequate credentials or arriving after cargo cutoff time.
When ocean carriers are late to port it causes overlapping vessel calls, which leads to congestion and slows trucks, Tioga’s Dan Smith said at this year’s Transpacific Maritime Conference in March.
Suggested fixes run from hiring more dock workers, using more workers to load and offload trucks in the yard, appointment systems, forming neutral chassis pools and keeping truck gates open longer each day.
Port drayage delays are expected to be an ongoing issue for shippers to monitor throughout the year.
L.A./Long Beach. Southern California has the largest container port complex in the nation and often is a pioneer in goods movement trends. Motor carriers in the area are aggressively pushing for reforms they say are necessary to maintain Los Angeles’ market share.
Gate congestion and long turn times have been standard for shuttle truck drivers here for several years, especially during the evening shift. But motor carrier industry officials say the situation has gotten much worse in recent months and if steps aren’t taken to address their concerns shippers, and the fees they pay, will go elsewhere.
“Our ability to deliver loads has been reduced by at least 35 percent of what our normal operation has been in the past,” Fred Johring, the owner of Golden State Express and chairman of the Harbor Trucking Association (HTA), told the Long Beach Harbor Commission at a Jan. 27 meeting. “Because of this we have to pull loads and defer returning the empties, which is costing us in both per diem and storage. And the per diem bills are rolling in. It’s unlike anything I’ve ever seen. How we’ll cover it, God only knows. But we have to put priority on the loads. “
HTA represents nearly 100 licensed motor carriers that collectively control 60 percent of the Southern California drayage fleet.
“Turn times at our gates are the single biggest competitive issue we are facing today, not just to the trucking community, but to every segment of the supply chain. If we don’t do something concrete about fixing or minimizing visit times at these gates now we will lose cargo to other ports,” HTA Executive Director Alex Cherin, said at the Port of Long Beach’s annual “Pulse of the Port” update on April 2.
It wasn’t supposed to be this way. A decade ago, long queues of trucks were spilling out on the streets of Los Angeles and Long Beach from marine terminals as ports and railroads were unable to keep up with the fast-growing volume. Local lawmakers, reflecting the mood of their communities, condemned the traffic snarls and the air pollution from idling trucks. Terminal operators responded to the threat of legislation that would penalize them for lengthy delays by instituting off-peak hours and a special-purpose entity called PierPass to collect fees for daytime pickup and delivery of containers.
A traffic mitigation fee of $61.50 per TEU is designed to push traffic to the nighttime and weekends. Almost 60 percent of containers are now moved during the night shift.
But the program has simply created bunching before 6 p.m., when the night shift begins, as truckers arrive as much as 2.5 hours early to get in line and avoid incurring a $123 daytime charge for a 40-foot box that their customers don’t want to pay.
Marine terminal operators have encouraged truckers to spread out their arrivals through the evening, but drivers are more interested logging multiple roundtrips within their federally mandated hours of service each day by starting as early as possible. If they come later, they run into the longshoremen’s collectively bargained rest break and have to wait to get processed at the gate, drop any empty container and pick up a new load. Also, drivers who arrive a few hours later would then work into the morning shift, where the PierPass fees they are trying to avoid would kick in again. Many night drivers just make short shuttle runs to nearby holding yards where daytime drivers will pick up the boxes for delivery to a customer’s dock.
The wait times limit drivers to one or two roundtrips in a workday, instead of three to five in the past, depending on where their customers are located in the region.
“The state of the port is bad at this time and has been in a steady downward spiral since November,” Michael Johnson, West Coast trucking operations manager for Port Logistics Group, said at the Harbor Commission meeting. “Returning empty containers is a nightmare and is a very time-consuming process.”
Motor carriers don’t just show up at terminals with no inkling about container availability, he explained. They constantly check online whether boxes ordered by customers are ready for pickup — been discharged from the vessel, released by Customs and had all terminal charges paid — before dispatching a truck. They also make appointments at terminals that require them. Even so, drivers frequently show up only to be told by the marine clerk that a box is in an enclosed area or that a box can’t be located and to come back another time.
Facilities close off sections of yard for safety reasons when containers are being discharged from a vessel and handling equipment is transferring cargo from yard tractors to the stacks. Yards are also closed down when there are too many trucks in an area trying to get boxes.
Terminal operators three years ago published a study claiming that the median queue time to discharge or pick up a load in the late afternoon was 45 minutes, but the study had a small sample size (about 250 trucks) and only measured the time it took to move through a terminal, not time spent waiting to reach a clerk at the truck pedestal. The terminals, for example, don’t count lunch breaks when calculating visit times.
That’s like “when you’re in a line at Dunkin Donuts and outside the glass door. The ports want to measure it when you’re at the register and you’ve paid for your coffee. It doesn’t work like that,” Ken Kellaway, president and CEO of RoadOne Intermodal Logistics, a national drayage fleet that operates in Southern California and other ports around the nation, said April 8 in Baltimore at an Environmental Protection Agency summit on port sustainability.
James Newsome, the president and CEO of the South Carolina Ports Authority, told American Shipper that the agency soon plans to measure the entire queue time instead of just checkpoint-to-checkpoint because its more correct. The methodology hasn’t been determined, but possibly could involve giving some drivers a punch card when they get in line, collecting it at the security exit and then using statistical sampling. He said trucks at the Port of Charleston currently average 24 minutes from the time they are greeted at the pedestal booth and make an equipment interchange. Double that time for a second interchange to pick up a box, adds a few minutes waiting to pull up to the booth and truckers generally are through a terminal in an hour. Truck drivers can make six or seven trips a day between the rail head in North Charleston and the port, he said.
The South Carolina Ports Authority operates its terminals, unlike most ports that lease them to companies that specialize in cargo handling and managing port infrastructure. That, Newsome points out, gives the port more control of its product.
Besides the lack of a common definition for what constitutes cycling through a terminal, the scope of the problem mainly relied on anecdotal evidence.
Diagnosis. Frustrated with the increase in delays, HTA decided to spend more than $150,000 to launch a first-of-its-kind study to benchmark where and when delays occur. It retained E2ManageTech Inc., which is collecting and aggregating GPS data from 13 fleets with more than 1,600 trucks. The company has geo-fenced the entire area around each terminal, essentially defining a virtual boundary using latitude and longitude information that alerts the system when to plot truck movements. The GPS coordinates enable the company to track every movement and show which terminals are processing trucks in and out of their facilities faster, with the capability to drill down to any day of the week and time of day. The system, for example, can identify if trucks are being delayed in the chassis inspection area or somewhere else within a particular facility.
HTA is publishing the monthly data on its website for subscribers.
The average visit time for all 13 terminals in the October-December time period was a little over an hour, but 22 percent of all moves took more than two hours and nearly half took between one and two hours. In February, the percent of moves above two hours was down to 17.2 percent. There is not enough data yet to determine if seasonality affects the wait times. Still, some containers take more than five hours to be picked up, according to the HTA.
Logistics professionals and trucking advocates say the more data-centric approach can reduce finger pointing and serve as the starting point for discussions with terminal operators on how to solve the problem because there is now a common, objective set of facts to inform decisions.
James Jack, executive director of the Coalition for Responsible Transportation, called the HTA study “a game changer.”
The Port of Long Beach is in the process of implementing a stakeholder group that would look at how to use the HTA data to improve cycle times.
The inability to get sufficient utilization of their leveraged assets, combined with stagnant rates, makes it difficult for contract drivers to make payments on cleaner diesel or alternative fuel trucks that are mandated in the ports. HTA officials say truckers need a minimum of three round trips to justify participation in the Clean Truck program. Modern trucks also bear higher insurance premiums and maintenance costs.
The drayage industry is extremely fragmented and undercapitalized, with about 5,000 intermodal trucking carriers serving ports and rail depots, not including large integrated trucking companies with dray and long-haul fleets. The top 10 companies in the $10 billion sector only control about 8 percent of the market, according to the Clarendon Group.
Driver turnover is common in the trucking industry and poor work conditions contribute to the exodus in the port sector, according to motor carrier executives. And, says Cherin, the more money a driver makes by being productive the less likely he or she is to be influenced by outside groups like the Teamsters union, which claim drivers are being cheated by being misclassified as subcontractors instead of employees.
The chassis situation is exacerbating the situation, motor carrier executives say.
“There’s been an extreme shortage of chassis at many of the terminals, which creates additional wait time and dry runs like we’ve never seen before,” Johring said.
Southern California has more than 100,000 chassis in the area, but the equipment isn’t readily available where and when it’s needed because pools are managed by different operators with different arrangements at each terminal. And chassis providers are using licensed motor carriers to reposition the chassis without paying for the service, according to HTA officers.
The trucking industry also wants to get out of the middle of paying the daily chassis fees. Ocean carriers a few years ago began divesting their fleets, forcing trucking companies to take responsibility for securing the chassis contracts with leasing companies. The charges ultimately are passed onto the beneficial cargo owners, but carriers frequently offer discounts to large shippers offering to pay a portion of the daily chassis charges. The deals aren’t communicated to the dray companies, which have to spend additional resources auditing chassis invoices and reversing the charges in their system, Johring said.
A Port of Long Beach stakeholder working group is scheduled to deliver recommendations for a better chassis model in the coming weeks. The group is leaning toward supporting a gray fleet that allows chassis to be used interchangeably without having to take them back to origin for each transaction, Harbor Commission Vice President Rich Dines said in his “Pulse of the Port” presentation.
“I think the leasing companies [DCLI and FlexiVan] understand that if they don’t address this proactively, we’ll do something,” he said.
Newsome said the South Atlantic Co-op Chassis Pool is working well in areas like Charleston and Savannah in part because the port authorities stressed to leasing companies that they needed to cooperate on managing a single pool of the wheeled
Another complaint voiced by motor carriers is that terminals don’t have adequate manpower servicing the container yards and virtually shut down during lunch and rest breaks. The one-hour lunch can turn into 1.5 hours by the time longshoremen return to their stations and restart equipment. When PierPass was implemented the terminals didn’t hire twice as many longshoremen, they just split their total labor force in half, according to Johnson.
Terminals have an incentive to clear their yards and make room for more inbound and outbound cargo, but Dines and others say terminals are less motivated to devote resources for moving containers in and out because they view the function as a cost center, with empty container processing receiving the least attention. They make money loading and unloading vessels and trains, so they tend to err on the side of caution when ordering dock workers for the yard because they can’t exactly predict how much labor will be needed on a given day.
Before any solutions can be implemented, all parties need to agree on one hour as an acceptable turn time, Cherin said. Long Beach should convene a port productivity work group to examine ways to offer terminals and truckers financial and operational incentives to meet the goal, he added.
“If we all agree on this one-hour metric and look at ways to successfully implement it, either through the tariff, or other mechanisms, we will realize greater efficiencies at the gates, drivers will get more turns in a shift and the peripheral issues of driver unrest will be mitigated,” said Cherin, who also heads the transportation and clean technology practice at law firm Englander Knabe & Allen.
“We believe that the port has the authority to compel the MTOs to provide a minimum standard of productivity for servicing the motor carrier. When these minimum standards are achieved on a regular basis, the marine terminal operators should be rewarded with some type of monetary incentive,” such as a percentage off of their lease payment, Johnson said at the public meeting.
Cherin stressed that using the tariff as a stick should be a last resort, saying he is optimistic recent signs of collaboration with terminals will pay off.
The Cure. HTA officials want the twin ports to become 24/7 operations and adopt a dynamic appointment system to smooth out cargo flows, suggesting that a small fee for all cargo instead of a daytime-only PierPass fee could cover the extra expense.
Four of the 15 terminals have appointment systems, but they operate in siloes rather than sharing information about truck activity across the terminal universe. A driver turning in an empty container at one of the 11 other terminals, for example, has a good chance of missing his or her appointment at an appointment terminal, trucking industry officials say.
HTA’s vision is for a universal appointment system spanning the San Pedro Bay port complex that can take real-time information about the current status of a truck and integrate it with data from motor carrier dispatch systems, cargo owners and regional traffic management systems and calculate the truck’s estimated time of arrival. Drivers would message via smart phone that they are headed to the port, allowing terminals to plan for their arrival. If a truck is running late, the terminal can give the slot to another driver. The terminals, in turn, could communicate back to the driver whether to come in or wait based on terminal capacity and container availability. More predictable truck traffic would then give terminals the justification to hire the correct amount of labor each day.
The Federal Highway Administration (FHA) is partnering with local governments and the ports on a pilot project, called FRATIS, for an advanced freight scheduling system designed to optimize shuttle-truck moves, and reduce traffic congestion, fuel consumption and emissions. Researchers want to combine proprietary data such as load matching, truck status and location, terminal wait times and shipper delivery requirements, with public information such as weather, accidents, work zones, weigh-in-motion truck scales and route restrictions for hazardous longs, in a single platform with an algorithm that can determine the best time and route for trucks to operate, with the goal of reducing congestion at the terminal and on the road. Information would come from a variety of sources, including road-side sensors, traffic cameras, and cell phone GPS location signals.
Under a new data exchange pilot, Port Logistics Group is sending electronic pre-arrival notices to Yusen Terminals for containers ordered by its customers. FHA has provided in-cab navigation units to Port Logistics Group, which is now sending dispatches directly to the trucks. The navigation units automatically send their GPS data directly to the terminal.
Johnson said large importers know days ahead of vessel arrival how many boxes will be offloaded from a ship, but no preplanning takes place with terminals. The FRATIS model is designed to give the terminal operator a 24-hour notice
of intended action, which would allow terminals to sort the yard more efficiently and do pre-positioning to reduce time spent culling the stacks to find individual boxes. And it would give trucks more flexibility to move between terminals and avoid congestion.
“The marine terminal operators have no clue why that truck is lined up in the queue until the driver tells the marine clerk why he’s there. If they knew in advance, they could make better decisions internally how to handle the truck and container,” Johnson said in an interview.
Terminals, for example, could block stow them in one area and when trucks come in for that order boxes can simply be pulled from the top of the stack and dropped on the chassis, without all the normal sifting.
FRATIS participants hope to expand the project to five or six terminals and a similar number of trucking companies by 2015, Johnson said.
“If they are able to produce successful results we’d ultimately like to see this expanded to all terminals in Southern California and the entire population of drayage trucks, and then expand it to other ports around the country,” Jack, of the Coalition for Responsible Transportation, said.
The CRT is a group of large shippers and trucking companies that work together to help owner-operators cover the investment cost in modern diesel trucks in an effort to make port communities economically and environmentally sustainable.
SSA Marine, which manages several area terminals, uses the first-in, first-out method to relieve congestion in its facilities, Johnson said. SSA owns a truck company too and an off-dock depot three miles away that essentially serves as a terminal. The truck drivers shuttle back and forth without having to pick up a specific box.
Retailer Target recently tested the “peel-and-run” strategy with a terminal and got great results, Rick Gabrielson, senior director of international transportation, said at the EPA event.
The strategy makes sense given the fact that a rubber-tired gantry crane can only move eight to 12 boxes an hour.
APM Terminals is trying a new process for delivering import containers under which it works one section of the yard at a time, with trucks taking boxes in order from the end of a stack instead of being serviced for random boxes, Johnson said. Trucks entering with empties are promptly serviced so they can offload and get over to a pick-up slot within their appointment window.
“The other party that benefits from increased efficiency is the beneficial cargo owner because transit times are reduced for their deliveries. Goods get to distribution centers more quickly, carrying costs are reduced and products are getting to store shelves more quickly. Also, there are fewer demurrage and per diem charges and those charges have been steadily rising at a number of ports around the country,” Jack said.
HTA appears to have an ally in Dines, who endorsed the one-hour turn-time metric.
“I’ve been an advocate for 24/7 operations. I know there’s opposition to that because of the cost. But we’re not talking enough about the cost savings, of the efficiency of the 24/7 port. We’re not talking enough about what it means to port customers to have the reliability of a 24/7 port. We’re
not talking about the competition with Canada, Mexico, the Pacific Northwest and the Panama Canal and what a 24/7 port complex would mean to that competition,” the harbor commissioner said at the meeting.
“Maybe another solution is the ports look at a fee per container and instead of having a traffic mitigation fee. Perhaps the ports could take over what we call PierPass and the ports could administer it. Maybe its $10 a container for every single container. And maybe that will bring enough money into help the MTOs move to a 24/7 model and allow these truckers to be rewarded for what they do.
“During the worst of times, during the Great recession, we told them you’re going to buy new trucks [at more than $120,000 a copy]. I think we owe it to them to fulfill our commitment for what they did for us. And they stepped up, they bought new trucks. We owe it to them to make their businesses viable. And we can’t do it the way we’re doing it today,” Dines said.
“And if the argument is made that we don’t need 24/7, well, when do we need it? We need it today so we can find the efficiencies and move cargo more effectively so we can attract that cargo for tomorrow. Our role is to protect jobs and create jobs.
“You can go to the grocery store at 2 o’clock in the morning. Why can’t we have the best port complex in North America open 24 hours a day?” he added at the “Pulse of the Port,” noting that the terminals’ labor contract allows for it.
Dines also suggested terminals could operate flex operations during the lunch hour by operating at half-staff and staggering who goes on break.
This article was published in the May 2014 issue of American Shipper.