Ocean Shippers’ Anger Mounts Over West Coast Port Delays

This story appears in the Nov. 24 print edition of Transport Topics.

FORT LAUDERDALE, Fla. — With the holidays fast approaching, shippers’ frustration with cargo disruptions at U.S. ports is boiling over.

That was the message delivered at the National Industrial Transportation League conference here last week by ocean shippers and their allies as they wrangle with spreading labor disruptions and a potential new congestion surcharge that could boost prices for Asia-U.S. cargo by 50%. In addition, they say barely 5% of chassis are being made available in a major West Coast chassis pool.

“There has been a virtual meltdown on the West Coast, which couldn’t have come at a worse time,” said Donald Pisano, president of importer American Coffee Corp. He said delays are worse than the publicly reported 30% to 40% slowdowns.

“The level of shipper frustration is at the boiling point. We, the [shipper] community, need to put pressure on ocean carriers,” said National Retail Federation Vice President Jonathan Gold on Nov. 17.

He noted that the latest affront was being delivered less than two weeks before the “Black Friday” shopping surge — $1,000 per shipment surcharges by some ocean carriers while the freight was in transit.

“We are starting to hear retail CEOs talking about West Coast ports. How often do you hear retail CEOs talking about West Coast ports?” he asked.

Those surcharges, on top of typical Asia-U.S. rates of about $2,000 per shipment, were imposed for the first time by ocean carriers when freight is already on a ship. In the past, Gold and other shipper officials said such surcharges weren’t applied to loaded cargo, and shippers had time to locate alternatives to avoid the fees.

As the NITL meeting came to a close late last week, some news sources reported that several ocean carriers canceled those surcharges.

Gold’s comment about CEOs was a reference to retailer Macy’s, one of the businesses that joined trade groups in pressing for a federal mediator to participate in West Coast contract talks that haven’t produced an agreement after 27 weeks. As the talks dragged on, port truckers staged job actions at as many as five drayage carriers.

There still hasn’t been a mediator appointed, though John Nardi, president of the New York Shipping Association, noted that a federal mediator last year helped groups, such as his carrier-based trade association, forge an agreement.

While shippers await progress, speakers at the meeting highlighted some brighter spots.

Nardi noted that a “gray” chassis pool covering all New York area ports is moving forward, with a starting date early next year. A chassis task force created through the Port of New York and New Jersey earlier this year has agreed to that type of pool, which would allow truckers to pick up and return equipment at multiple sites without restrictions imposed by carriers or lessors, he said.

Lessors, truckers and terminal operators “came together and realized that what we have is not sustainable,” Nardi said. “There are a lot of improvements to go. We are working toward a common goal here.”

Elton Poisler, logistics manager for international freight and trade services at chemical maker DuPont, told Transport Topics that some carriers were succeeding in making on-time domestic pickups and deliveries nearly 90% of the time for international cargo.

“Somehow they managed to get it done,” Poisler said.

However, the shipper — which moves 170,000 ocean container units, primarily for export — said overall on-time deliveries tracked by DuPont on a door-to-door basis this year have been 58%. Port-to-port on- time performance for ocean carriers is better at 76%, he said, while observing “that is nothing to boast about.”

Gold and others said the West Coast situation is being driven by multiple factors in addition to the contract situation, particularly cargo surges and a shortage of chassis and truck drivers.

Terry Bunch, vice president for business development at PLG Consulting, illustrated the situation. He said that a Los Angeles/Long Beach pool with 35,000 chassis had just 2,298, or less than 7%, available for truckers on a recent day.

With chassis scarce, Bunch said almost half of the pool’s chassis were kept out of the terminal for six to 30 days, far longer than normal. The scarcity also has driven up truckers’ terminal dwell time and exacerbated the shortage of drayage drivers.

While noting that “this won’t be solved quickly or easily,” Bunch praised chassis lessor Flexi-Van for relocating 1,000 chassis to Southern California to ease the shortage.

Like Nardi, who cited the successful gray chassis pools in Virginia and the Mid-Atlantic area, Bunch and Pisano believe that approach is the best long-term solution.

Gold also noted a potential ocean carrier bright spot: “If [ocean carriers] put better service forward, shippers will pay more. But that service doesn’t exist.”

Poisler agreed, saying, “Shippers have been willing to pay for better performance, but they haven’t seen it.”