Industry Insights: As the Holiday Season Arrives, Constraints at the Los Angeles/Long Beach Ports Tighten Even More

As the country heads into the holiday peak season, gridlock at the LA/LB port complex continues. Struggles with delayed vessel arrivals, congestion, labor availability, chassis shortages, and appointment system shortcomings continue to hamper the flow of containers. The industry continues to push for a more collaborative approach to problem-solving that looks to address the many complexities and interdependencies of the region. 

Labor reductions limiting productivity at the port 

The region, already in the midst of a chassis shortage crisis, is experiencing further constraints as a result of a recent reduction in PMA labor crews at the LA/LB marine terminals. Consequently, arriving vessels are delayed, take longer to unload, and empty containers are not being fully cleared in an attempt to protect vessel schedules. Because terminals are beyond capacity, the reduced workforce’s inability to load and unload vessels quickly is causing terminals to burst at the seams while simultaneously leaving U.S. exports stranded and Asian ports severely short on empty containers.

Holiday-bound independent contractors may leave as volumes surge

In a typical year, peak season would have started to wind down by November. However, 2020’s fluctuating demand has caused volumes at the ports to continue to surge, likely continuing into Q1 2021. If the predominantly independent contractor driver workforce leaves the market during the holidays, which traditionally happens, it will likely set off a ripple effect of worsening conditions that will be felt across the import supply chain.

As an already limited driver market deals with port congestion and chassis shortages, more containers are dwelling longer on off-site yards. The additional moves required to pick-up and drop-off assets from off-site locations has significantly decreased driver productivity, furthering the crisis at hand. Shippers’ desires to avoid demurrage and per diem can only be addressed with more drivers. As a result, carriers are in a bidding war for drivers in a drayage market that is already constrained for capacity, driving up costs.

Dual transactions are the solution, as well as the problem

Dual transactions, a move that allows drivers to return an empty container and pick up a loaded import at the same location, are key to driver productivity right now. However, the formation of steamship line (SSL) alliances and vessel-sharing agreements (VSA’s) have sparked a set of complications that make it difficult for carriers to perform said transactions. 

As SSLs set themselves up for arriving vessels, motor carriers are directed to drop-off empty containers at one of several terminals. These drop-offs are optimized for the SSL, oftentimes requiring carriers to return containers somewhere other than the originating terminal and away from incoming imports. Additionally, if the empty container is on a POP chassis and the terminal is in a chassis deficit, the chassis cannot be taken off the lot to be reused. Misdirections like these create costly inefficiencies and a loss of productivity for carriers.

Depending on the marine terminal’s empty inventory and contractual arrangements, shut offs have also impacted motor carrier productivity. SSLs may choose to stop receiving equipment because they do not want to exceed their allocated space, or the terminal may close off the line from directing equipment to the facility because they are above contractual inventory levels. The previous two scenarios, coupled with a lack of appointment times allocated to the trucking community by the marine terminal, have made conducting business in and through the ports more arduous. As a result, dual transactions are challenging to execute. According to the Harbor Trucking Association (HTA), industry stats indicate that only 20% of transactions are currently dual transactions.

Despite these impediments some terminals are requiring dual transactions to control congestion at their yards. As a number of terminals have decided to stop accepting empty containers altogether, decisions like these leave drayage carriers in a scenario where dual transactions are required, yet empty returns aren’t accepted. As all stakeholders are looking out for their own best interests, the current conditions have created a challenging environment for drayage carriers to operate in and has driven up demurrage and per diem charges.

Stable capacity inside and outside Southern California

Thanks to the breadth of NFI Cal Cartage’s drayage network, our team of experts have helped customers navigate the ongoing issues surrounding the Southern California ports. Those working with a premier carrier like NFI Cal Cartage are generally the first to gain clarity and stable capacity at the ports, notably during times of gridlock.

While the congestion at the Los Angeles/Long Branch Port Complex continues to take its toll on the region, NFI Cal Cartage’s expansive drayage and transload network has also opened up creative opportunities for shippers around the country. Located at every major port across the United States, our network – coupled with an end-to-end suite of 3PL services – provides shippers capacity and flexibility, even while other ports experience surges.

Though constraints at the LA/LB ports are far from over, our team is dedicated to help shippers remain educated about port operations and provide front-line visibility for all supply chain stakeholders. To stay up-to-date on the state of the Los Angeles and Long Beach Port Complex and other industry news, subscribe to NFI Cal Cartage’s monthly port drayage news emails.

Insights contributed by Aaron Brown, SVP, NFI Cal Cartage and Richard Jung, VP of Sales, NFI Cal Cartage