Tuesday, October 14, 2014

Container Shipping Line Alliances May Exacerbate US Freight Congestion Problems

Situation at US Box and Bulk Cargo Ports Needs Solution Now
Shipping News Feature

US – The sudden rush of alliances, 2M, Ocean Three etc. between the world’s various container shipping lines may cause further problems for US ports which are already struggling to handle current freight levels, particularly at peak times. The situation at the Port of Long Beach, whilst probably the most extreme example, illustrates just how bad things have become with a 5% rate hike this week on bulk and general cargo which provides half the port’s tonnage throughput but only about a quarter of revenue.

The main problem is simply the volume of containers now arriving at ports such as Long Beach and Los Angeles with the larger 14,000 TEU ships which have become the fashion. The alliances intend to increase the number of boxes carried per voyage, causing more chaos on the quays. At the moment some consignee’s are waiting over two weeks for cargo as the ports simply run out of storage room. This results in trucking boxes further away, even to car parks, which slows the whole retrieval process down.

Long Beach Chief Executive Jon Slangerup, who last week convened a ‘Congestion Relief Team’ is clear about how to resolve the matter. He says the main problem is lack of chassis availability to clear the containers onto wheels quickly. Since the shipping lines withdrew from the chassis hire business in 2010, covered in some detail in our story at the time, the situation has gradually deteriorated.

Slangerup has proposed a larger chassis pool to reduce the problem but he will need to get his plans agreed by the major chassis hire groups who will need to cooperate, plus presumably the Federal Motor Carrier Safety Administration (FMCSA), the very body which caused the withdrawal of the shipping lines from the process when they introduced stringent new safety requirements. Some cite the need to have any inter-company discussions approved by the relevant authorities as a further factor in the delays to resolving the problems.

So for the moment the catalogue of disaster continues, there is talk of holding ships offshore until berths become available whilst local agents report 2-4 days extra delays for discharging some vessels, loss of boxes within the ports for sometimes weeks at a time, significant interruptions to intermodal services as containers are transferred to ‘off dock’ rail terminals and bills for demurrage mounting with many hauliers said to be charging ‘congestion surcharges’ of up to $500 per container.