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New normal in LA-LB means congestion at least until summer

The ports of Los Angeles and Long Beach have settled into a pattern of congestion that virtually every sector of the international supply chain says will last at least into the summer months — and possibly longer — if second-half volumes don’t wane.

Recent metrics on trucker wait times, container dwell times, the number of ships in harbor, and chassis availability have generally plateaued, suggesting that conditions are not improving materially, but not getting worse, either, industry sources said. JOC.com spoke to numerous executives at ports, ocean carriers, terminal operators, non-vessel-operating common carriers (NVOs), third-party logistics providers (3PLs), intermodal equipment providers (IEPs), waterfront employers, and the International Longshore and Warehouse Union (ILWU).

How long the congestion continues will depend largely on import volumes between now and the beginning of the peak season in August. Weekly import volumes so far this year are “30 to 40 percent higher” than what the port was handling in 2019 and previous years, said Gene Seroka, executive director of the Port of Los Angeles.

Anticipating record sales in 2021, retailers expect US containerized exports will increase 20 percent or more each month through June, albeit from unusually low import volumes last spring. Los Angeles-Long Beach handles about 50 percent of total US imports from Asia, according to PIERS, a JOC.com sister product within IHS Markit. Asian imports in Los Angeles-Long Beach have totaled about 800,000 TEU per month each month since last July, according to PIERS. That was a year-over-year increase of at least 10 percent every month.

Despite progress in some areas, cargo volumes remain so strong that incremental gains are overtaken by the steady arrival of more ships each week. Terminal operators had banked upon a decline in import volumes for at least a couple of weeks when factories in Asia closed for the Lunar New Year in February, but that did not happen.

Jon Monroe, who serves as a consultant to NVOs, said there was only a minor dip in US imports from Asia following Lunar New Year. “March is back up and going strong. We’re already back to pre-Chinese New Year volumes,” he said.

The Southern California ports are working with urgency to get a grip on the multiple forces contributing to congestion, Seroka said. The port and terminal operators are looking to squeeze more productivity wherever they can, but it will take at least into the summer, “and then we’ll have to pivot for the peak season,” he said. Seroka said the port complex appears to have stabilized at a “baseline” weekly volume that is much higher than in previous years.

Increased vaccinations for longshore workers and other essential workers is helping ease labor shortages. Although carriers are metering cargo flow through Southern California by adding services to Oakland and the Pacific Northwest ports, Los Angeles and Long Beach do not expect that carriers will reduce the number of services to Southern California.

“Realistically, you can’t divert ships if thousands of supply chains depend on Los Angeles-Long Beach,” Dan Smith, principal at the consultant Tioga Group, said this week. “We seem to have hit a super-peak and stayed there.”

Carriers are adding vessel strings to Southern California; Mediterranean Shipping Co. announced Wednesday it will launch the Sentosa service from Southeast Asia that will begin calling Long Beach in April.

Center of the storm surge
By concentrating imports in Southern California, retailers and manufacturers are stressing the assets of every sector of the supply chain. Vessels are remaining at anchor up to seven days before being able to berth. The number of vessels at anchor each day averages 28 to 32, according to the Marine Exchange of Southern California.

Terminal operators expect to experience the current level of congestion for several months. Alan McCorkle, president of Yusen Terminals in Los Angeles, said he believes it will take until late May to June to dig out.

Virtually every sector of the supply chain has challenges. The average container dwell time at the terminals reached a record high 5.1 days in January, up from 4.99 days in December, according to the Pacific Merchant Shipping Association (PMSA). That is more than double the 2.4 days of container dwell time in January 2020, PMSA said.

The average truck turn time at terminal gates in February was 88 minutes, the same as January, but up from a record low of 58 minutes last June, according to the Harbor Trucking Association. Chassis detained at warehouses and distribution centers, known as street dwell time, was 6.7 days this week, according to the Pool of Pools operated by the three major IEPs.

“Street dwell is the killer,” said Ron Joseph, executive vice president and COO of DCLI. The normal street dwell time for chassis is three to four days, Joseph said.

However, DCLI and other IEPs are repairing broken chassis at a torrid pace, and according to the Pool of Pools website, out-of-service 40-foot chassis this week were in the highly desirable green designation, or less than 5 percent, which means they are not a drag on chassis availability.

“We’ve been continuing to work overtime every week. This is the lowest out-of-service chassis we’ve ever had,” Joseph said. He noted that on a recent Saturday, DCLI had 55 mechanics repairing chassis, and returned 194 chassis to service.

However, chassis availability is insufficient for the cargo volumes being handled. SSA Marine, which has its own chassis fleet, recently added more than 1,000 chassis, “and we’re still short,” said Ed DeNike, president of SSA Containers.

Port, warehouse workers being vaccinated
The availability of longshore labor has also been a challenge since December, with more than 600 members of the ILWU in Southern California testing positive for COVID-19, and 12 dockworkers dying. The positive tests have contributed to a labor shortage, with employers forced to limit the number of work gangs assigned to a vessel to four. Pre-COVID, five, six or seven gangs were regularly assigned to each container ship.

However, the health departments in Los Angeles and Long Beach have been ramping up vaccinations for longshore workers and other essential workers.

“We know that ILWU workers welcome the option to get the vaccine and the measure of safety it provides because they had been working in close proximity for nearly a year handling cargo during the pandemic and seeing their colleagues suffer greatly from COVID-19,” Frank Ponce De Leon, ILWU coast committeeman, said in a statement released by the union.

Jim McKenna, president of the Pacific Maritime Association, which represents terminal operators and shipping lines, said that at the current pace, it looks like all longshore workers who want vaccines will have been vaccinated by the end of next week.

Significant progress is being made in vaccinating warehouse workers, who have also been classified as essential. Port Logistics Group, a 3PL with warehouse and trucking operations in the region, said in a company memo it is providing its workers with documentation certifying their employment, which provides them priority status in receiving the vaccines.

Contact Bill Mongelluzzo at bill.mongelluzzo@ihsmarkit.com and follow him on Twitter: @billmongelluzzo.

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Global container carrier reliability plumbs new depths in January

Global container vessel reliability fell to 34.9 percent in January, the lowest ever recorded, as ports around the world continued to struggle with near-record volumes for the sixth consecutive month.

“Global schedule reliability was down 33.5 percentage points compared to January 2020, and is now the lowest figure ever recorded by Sea-Intelligence [Maritime Analysis],” the maritime consulting firm said Thursday in its Global Liner Performance report.

Reliability in the eastbound trans-Pacific trades in January plummeted to 13.8 percent to the US West Coast, the second-lowest on record for the trade, and 21.5 percent to the East Coast, the lowest ever on that lane, according to Sea-Intelligence.

The late vessel arrivals help explain why US ports have been struggling since last summer to handle near-record volumes of US imports from Asia and why port congestion will likely linger through the spring months.

Drilling deeper into the numbers, Sea-Intelligence noted that the number of days vessels are delayed and must sit at anchor while awaiting berthing space continued to increase, an ominous sign for ports, especially Los Angeles-Long Beach, where vessels awaiting berthing space is a major contributor to congestion at the largest US port complex. The ports of Los Angeles and Long Beach handle about 50 percent of US imports from Asia, according to PIERS, a JOC.com sister product within IHS Markit.

On the West Coast, the average delay for late vessel arrivals in January increased to 10.28 days, up from 8.01 days the previous month and 3.46 days in January 2020. “This was the second-highest figure on the trade lane,” Sea-Intelligence said.

On the East Coast, the average delay for late vessel arrivals increased to 5.53 days, up from 4.92 days in December and 3.63 days during the same month last year.

Schedule unreliability triggers logistics problems
Late vessel departures from Asian load ports, and late vessel arrivals at US ports, have triggered a series of logistics issues throughout the transportation supply chain. Vessel bunching at the ports, congested marine terminals, excessive container dwell times on the terminals, long truck lines at the gates, and equipment shortages have occurred to varying degrees at some US gateways.

At the same time, US ports continue to handle near-record imports from Asia. Imports exploded in late June as the US economy reopened after the first wave of COVID-19 closures last spring, and imports have remained strong ever since. According to the Global Port Tracker, which is published monthly by the National Retail Federation and Hackett Associates, year-over-year monthly double-digit increases in import volumes are projected to continue at least through June.

Contact Bill Mongelluzzo at bill.mongelluzzo@ihsmarkit.com and follow him on Twitter: @billmongelluzzo.

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