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October 29 2018

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16 The Journal of Commerce | October 29 2018 International Maritime OCEAN CARRIERS, TERMINAL operators, and truckers in the ports of Los An- geles and Long Beach are contending with chassis shortages and hurdles in returning empty containers to the terminals. That's put shippers 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 han - dled 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," a drayage company executive said. 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 bene- ficial cargo owners (BCOs), carriers, terminal operators, and intermodal equipment providers (IEPs) each do what is best for their industry with- out regard to the impact on drayage companies and their drivers. The terminal congestion resulting from the chassis dislocations and inability to return empty containers is causing truckers to miss their appointment windows and is signifi- cantly reducing the number of dual transactions the drivers can make, said Weston LaBar, CEO of the Harbor Trucking Association. 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 LA-Long Beach, where a number of the carriers 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. "It's not like it used to be, where a container went out of a terminal and the empty was returned to the same terminal," said Ed DeNike, president of SSA Containers. SSA operates three container terminals in Long Beach and it serves all three alliances. The shipping lines instruct the BCOs and their truckers to which terminals they want the containers returned after they have been unloaded based on vessel departure dates, the capac- ity of the vessels to load empties, or the financial arrangements the lines have with the individual terminals. "Sometimes it gets to the point where we have to stop taking empties because of the fill rates," he said. Los Angeles-Long Beach is unlike any other port in the country because vessels discharge 80 to 100 percent of the containers from each call in 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. When a big cargo surge hits a ter- minal, the operator may have no choice but to deny receipt of any more empty containers until it's able to make room in the yard by loading the empties and export loads onto the vessel. The scattering of containers and empties across multiple terminals was intensified by last year's alliance recon- figuration, and the effects of carrier mergers in recent years is adding to the complexity in large port complexes. This April's start of Ocean Network Express resulted in the three Japanese lines, each with its own terminal, at- tempting to fulfill its volume commit- ments 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. While the logistics problems resulting from this consolidation of carriers and alliances is costly for the terminals, it's creating a host of prob - lems for truckers, especially when the terminals shut off the return of empty containers. "We're sitting on empties I can't return," said Fred Johring, president of Golden State Logistics. That condition ties up not only the empty container but also the chassis it's mounted on. The peaks and valleys of cargo flow exacerbate the demands placed upon the chassis supply, creating shortages at some terminals and overflows at others. The migration of chassis is the No. 1 issue in the pool of pools launched in March 2015 by Direct ChassisLink Inc. (DCLI), Flexi- Van, and TRAC Intermodal, said Ron Joseph, executive vice president and chief operating officer of DCLI. The so-called gray pool has improved chassis availability because all of the equipment is interoperable, meaning chassis contributed by the three equipment providers can be picked up at one location and deliv- ered to any other location. However, during periods of congestion in late summer and autumn, chassis disloca- tions get progressively worse. JOC email: twitter: @billmongelluzzo Peak pressure points As cargo surges, ports of Los Angeles and Long Beach struggle with chassis shortages and container returns By Bill Mongelluzzo "It's not like it used to be, where a container went out of a terminal and the empty was returned to the same terminal." Logistics problems grew worse with the restructuring of vessel-sharing alliances on April 1. Importing & Exporting | Ports | Carriers | Breakbulk | Global Logistics

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