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Feb.6, 2017

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INTERNATIONAL MARITIME IMPORTING | EXPORTING | PORTS | CARRIERS | BREAKBULK | GLOBAL LOGISTICS 16 THE JOURNAL OF COMMERCE www.joc.com FEBRUARY 6.2017 By Bill Mongelluzzo US PORTS WILL face unprecedented opera- tional challenges when ocean carriers restructure their vessel-sharing alliances in April, requiring carriers, terminal operators and equipment providers to develop a plan so shippers' costs don't spiral out of control. This mea ns termina ls must of fer uniform gate hours and procedures for ret urning empt y conta iners, t r ucker appointment systems must be synchronized across the port complex, and all members of the supply chain must have access to the data they need to operate at the lowest cost. Ground zero for these much-needed rules for gate hours, trucker appointment sys- tems, and pickup and drop-off locations for chassis will be Los Angeles-Long Beach, the largest US port complex. "Issues are always magnifi ed in Southern California because of its sheer size," Phil Con- nors, executive vice president of Kenilworth, New Jersey-based equipment lessor Flexi-Van, told a meeting of the Propeller Club of Los Angeles-Long Beach in January. Ocean carriers on April 1 will reduce from four to three the number of vessel- sharing alliances that will dictate vessel strings and port calls around the world. The Ocean Alliance will control 41 percent of total trans-Pacifi c trade, the THE Alli- ance will have a 29 percent market share, and the 2M Alliance plus Hyundai Mer- chant Marine will have a 21 percent share, according to analyst Alphaliner. The three alliances collectively will control 91 percent of US trade volume. US gateways will experience a shifting of vessel calls and container volumes from port to port and from terminal to terminal within ports based upon the pursuit of economies of scale and effi ciency, said Noel Hacegaba, chief commercial offi cer at the Port of Long Beach. "Effi ciency will be the name of the game," he said. Cargo interests will choose gateways that f low cargo with the fewest impedi- ments and the lowest bottom-line cost to their supply chains, and container lines will pick the most efficient terminals in handling the large vessels they are deploy- ing, Hacegaba said. The average vessel size in Los Angeles-Long Beach today is about 7,500 20-foot-equivalent units, but carriers soon will deploy vessels of 14,000 TEUs or greater, he said. The complexities involved in the shifting of assets, and the handling of larger vessels will be the greatest in Los Angeles-Long Beach. The port complex handled more than 15.6 million TEUs last year, an increase of 1.8 percent from 2015. That is more than twice the volume of the second-largest port complex, New York-New Jersey. The number of transportation facili- ties engaged in handling these container volumes is also much greater in Southern California. Los Angeles-Long Beach, for example, has 13 container terminals, com- pared with six at the largest East Coast port, and 17 different start-stop locations for pick- ing up and returning chassis. CRYING OUT FOR CHANGE Hanjin's lessons and the imminent launch of new alliances intensify the calls for a uniform system to improve effi ciency New alliances take effect in late April 2017 Ocean Alliance to dominate overall trans-Pacific trade THE Alliance (until 2022) 29% Ocean Alliance (until 2022) 41% 2M + HMM* (until 2020) 21% 46692 www.joc.com * Original 2M deal between Maersk and MSC in place to 2025. Final 2M + HMM network yet to be announced Source: Alphaliner

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