Port CongestionPort Congestion

McKenzie SchwitzerMcKenzie SchwitzerKaleigh MartensKaleigh MartensJustin BeckmanJustin BeckmanYong Sun YooYong Sun Yoo

Introduction to Port Introduction to Port CongestionCongestion

The Causes of Port Congestion The Causes of Port Congestion are Many and Variedare Many and Varied

► Increased Demand for Container ShippingIncreased Demand for Container Shipping► Port Constraints Port Constraints ► Poor ManagementPoor Management► Strikes and other work related problemsStrikes and other work related problems► Too many vessels are being directed at a portToo many vessels are being directed at a port► The construction of the vessel The construction of the vessel ► How containers are loaded and unloadedHow containers are loaded and unloaded► SchedulingScheduling► Truck driver shortageTruck driver shortage► PollutionPollution► Major influencing retailers on congestionMajor influencing retailers on congestion

Increases in Demand for Increases in Demand for Container ShippingContainer Shipping

► Increases in International Business over Increases in International Business over the past years has created more the past years has created more demand for ocean shippingdemand for ocean shipping

►Cost savings from cheaper labor, lower Cost savings from cheaper labor, lower cost of resources, operating efficiency, cost of resources, operating efficiency, and increased global promotion of and increased global promotion of trade with trade agreements like NAFTAtrade with trade agreements like NAFTA

► Important to many companies to Important to many companies to remain in a competitive marketremain in a competitive market

Constraints on Port CapacityConstraints on Port Capacity

►Problems with limited locationProblems with limited location Too many vessels are being directed at a Too many vessels are being directed at a

port and the port has to service all types of port and the port has to service all types of vesselsvessels

The construction of the vessel also has a lot The construction of the vessel also has a lot to do with the way containers are loaded to do with the way containers are loaded and offloaded on to the vesseland offloaded on to the vessel

The general size of shipyardThe general size of shipyard Demand for serviceDemand for service Infrastructure and inland transportationInfrastructure and inland transportation

Poor ManagementPoor Management

►Poor management and planning is Poor management and planning is another factor that leads to delays and another factor that leads to delays and backlogsbacklogs

►There is a high turnover of There is a high turnover of management at the container terminalmanagement at the container terminal

►Casual workersCasual workers Workers that are casual they do not Workers that are casual they do not

receive substantial employment benefits receive substantial employment benefits no training and lack of experienceno training and lack of experience

Ship SizeShip Size

► Benefits of larger shipsBenefits of larger ships Able to carry more cargoAble to carry more cargo Economies of scaleEconomies of scale- Universal containersUniversal containers• Problems with ship sizeProblems with ship size

• The ship travel speedThe ship travel speed• There is limited port usageThere is limited port usage

• Terminal sizeTerminal size• Water depthWater depth• Port equipment-larger cranes Port equipment-larger cranes • scheduling problemsscheduling problems

Truck Driver ShortageTruck Driver Shortage

► Hard to find driversHard to find drivers► Low rate of payLow rate of pay► Rate of turnover is more than 100%Rate of turnover is more than 100%► Long hours and weekend workLong hours and weekend work► Traffic tie-ups Traffic tie-ups ► Delays on highways because of congestion and Delays on highways because of congestion and

bottlenecks on highways cost the trucking industry bottlenecks on highways cost the trucking industry an estimated $7.8 billion in 2004an estimated $7.8 billion in 2004

► Truck driver shortageTruck driver shortage There are not a sufficient amount of truck drivers to drive There are not a sufficient amount of truck drivers to drive

the trucks after the shipments have been delivered to the the trucks after the shipments have been delivered to the portsports

West Coast Port CongestionWest Coast Port Congestion

►Dramatic increase in imports from AsiaDramatic increase in imports from Asia Due to cheaper labor = cheaper productDue to cheaper labor = cheaper product

►Labor Shortages when unloading portsLabor Shortages when unloading ports

Labor Problems with West Labor Problems with West CoastCoast

International Longshore & Warehouse Union International Longshore & Warehouse Union members & tentative contractsmembers & tentative contracts

Slowed down their workSlowed down their work Not enough people are working late shiftsNot enough people are working late shifts

►Most people are being overworked whether they work Most people are being overworked whether they work at the terminal or drive a truckat the terminal or drive a truck

Aren’t enough drivers to drive the trucks once Aren’t enough drivers to drive the trucks once products are brought into the portproducts are brought into the port

Aren’t enough rail lines eitherAren’t enough rail lines either►Forces major delays & problems of not having products Forces major delays & problems of not having products

when needing themwhen needing them

Problems with PortsProblems with PortsPollutionPollution

► Cargo ships using Cargo ships using heavy bunker fuelheavy bunker fuel

►Diesel powered Diesel powered truckstrucks

► People living under People living under the smog near LA & the smog near LA & LB ports tend to LB ports tend to have respiratory & have respiratory & cardiovascular cardiovascular problemsproblems

Problems with Port PollutionProblems with Port Pollution

► International Longshore & Warehouse International Longshore & Warehouse Union (ILWU) has launched a campaign to Union (ILWU) has launched a campaign to clean up the air pollution clean up the air pollution Want to have ships reduce harmful emissions Want to have ships reduce harmful emissions

by reducing idling timesby reducing idling times Wants cleaner fuels for terminal equipmentWants cleaner fuels for terminal equipment Wants 20% reduction of ship pollutants by Wants 20% reduction of ship pollutants by

20102010 Shipping companies & terminals have said Shipping companies & terminals have said

they are working hard to helpthey are working hard to help

Electronic Truck IDElectronic Truck ID

► 2003 – Long Beach 2003 – Long Beach introduced a new introduced a new wireless truck ID wireless truck ID systemsystem Increase safety, security, Increase safety, security,

& efficiency& efficiency Immediately transmits Immediately transmits

information as soon as a information as soon as a truck pulls into a marine truck pulls into a marine terminal & is supposed to terminal & is supposed to reduce time trucks are reduce time trucks are there to pick up or drop there to pick up or drop off containerized cargo off containerized cargo

Will help reduce Will help reduce emissions created by emissions created by idling trucks as wellidling trucks as well

Offpeak ProgramOffpeak Program

► Began in July of 2005 due to port congestion Began in July of 2005 due to port congestion on the West coast & the 40% increase in on the West coast & the 40% increase in imports between 2000 & 2004imports between 2000 & 2004

► Helping to move more activity from both Helping to move more activity from both ports from conventional business hours to off ports from conventional business hours to off hourshours

► Any shipper who moves cargo between 3AM-Any shipper who moves cargo between 3AM-6PM is assessed an $80 TMF (40ft. Container) 6PM is assessed an $80 TMF (40ft. Container) & a $40 TMF (20 ft. Container) on Monday-& a $40 TMF (20 ft. Container) on Monday-Friday. No fees for shipments outside these Friday. No fees for shipments outside these hours.hours.

► Also doing this to reduce smog during normal Also doing this to reduce smog during normal business hoursbusiness hours

Offpeak ProgramOffpeak Program

►Paul Sherer (spokesman for Offpeak) Paul Sherer (spokesman for Offpeak) has said that a 1/3 of the shippers has said that a 1/3 of the shippers have moved to off hours.have moved to off hours. Truck drivers enjoy this because they are Truck drivers enjoy this because they are

now able to make more runs during the now able to make more runs during the dayday

More than 1 million trucks trips have been More than 1 million trucks trips have been diverted from peak daytime shipment to diverted from peak daytime shipment to offpeakoffpeak

Diversion of Cargo Diversion of Cargo

► Due to high container Due to high container growth, tight capacity & growth, tight capacity & rising fuel costs at LA rising fuel costs at LA and LB shippers and and LB shippers and carriers are being carriers are being routed to other portsrouted to other ports

► Most shippers & Most shippers & carriers are re-routing carriers are re-routing to the East coast, but to the East coast, but some are going to some are going to Northern California Northern California portsports

► LA and LB had LA and LB had previously handled 40% previously handled 40% of all imports from Asiaof all imports from Asia

Major influencing retailers on Major influencing retailers on CongestionCongestion

► Walmart--- sell highest volume of products.Walmart--- sell highest volume of products.► Loss of business devastating during the Christmas Loss of business devastating during the Christmas

holidays.holidays.► Build Distribution Centers allowing to ship through Build Distribution Centers allowing to ship through

canals to avoid Pacific Coast Ports.canals to avoid Pacific Coast Ports.► Home Depot has also adopted this strategy as a Home Depot has also adopted this strategy as a

retailer.retailer.► Sears is an example of a retailer who has shipped Sears is an example of a retailer who has shipped

to the east coast ports to avoid congestion to the east coast ports to avoid congestion problems in the west.problems in the west.

► Problems for retailers all centers around Just in Problems for retailers all centers around Just in Time InventoryTime Inventory

Problems for Just In Time Problems for Just In Time InventoryInventory

► If products have to sit for 4 to 7 days If products have to sit for 4 to 7 days this may result in loss of business.this may result in loss of business.

►Sitting at ports results in large Sitting at ports results in large warehouse costs for retailerswarehouse costs for retailers

► It also costs ship owners a large It also costs ship owners a large amount of money to have their assets amount of money to have their assets sitting loaded at ports. (Turnaround sitting loaded at ports. (Turnaround time is poor)time is poor)

More problems tied to Just in More problems tied to Just in Time InventoryTime Inventory

►ExampleExample►The Union Pacific RailroadThe Union Pacific Railroad►Loosing half of their employees due to Loosing half of their employees due to

retirementretirement►Many containers are being loaded onto railcarsMany containers are being loaded onto railcars►Hiring new employees results in high training Hiring new employees results in high training

costs in order to have a effective and efficient costs in order to have a effective and efficient workforceworkforce

Port of New York/New JerseyPort of New York/New Jersey► Ability to improve capacity of port by:Ability to improve capacity of port by:

► Dredging (most terminals to 45 feet)Dredging (most terminals to 45 feet)► Larger vessels to call at the portLarger vessels to call at the port

(for this to be effective ports must remain congestion (for this to be effective ports must remain congestion free)free)

► This leads to more capacity for shipsThis leads to more capacity for ships► Reconfiguration of the port terminalsReconfiguration of the port terminals

► Virtual inspection system (allows quicker movement Virtual inspection system (allows quicker movement through the gatethrough the gate

► Ability to weigh and take pictures of trucksAbility to weigh and take pictures of trucks► Expansion of physical infrastructureExpansion of physical infrastructure

► Faster more efficient movement of goodsFaster more efficient movement of goods► Additions of new cranes and other equipment to Additions of new cranes and other equipment to

improve efficiencyimprove efficiency

Port of New York/New JerseyPort of New York/New Jersey(continued)(continued)

► Dramatic reduction in turnaround time for trucksDramatic reduction in turnaround time for trucks►Reduction from 6 hrs in 2004 to around one Reduction from 6 hrs in 2004 to around one

or one and half hours in 2005or one and half hours in 2005► The completion of a new ExpressRail terminal in The completion of a new ExpressRail terminal in

ElizabethElizabeth►Provides on-dock or near-dock service at the Provides on-dock or near-dock service at the

terminalsterminals►Containers are easily put on trains within the Containers are easily put on trains within the

terminal or just outside ofterminal or just outside of►22ndnd part is creation of a storage facility part is creation of a storage facility

allowing the number of trains serving the allowing the number of trains serving the port to increaseport to increase

Statistics of East Coast PortsStatistics of East Coast Ports

►16.2 billion TEU’s on the West Coast16.2 billion TEU’s on the West Coast►11.8 billion TEU’s for the Top six 11.8 billion TEU’s for the Top six

container ports in the East. (NY/NJ, container ports in the East. (NY/NJ, Charleston, Hampton Rds, Savanna, Charleston, Hampton Rds, Savanna, Miami, and Montreal)Miami, and Montreal)

►Container volume on the East coast Container volume on the East coast only exception being NY/NJ has been only exception being NY/NJ has been measured and the ability to scale measured and the ability to scale growth initiatives to meet demand.growth initiatives to meet demand.

Relieve Port CongestionRelieve Port Congestion

►Port DevelopmentPort Development Expand capacity: New port, DredgeExpand capacity: New port, Dredge Expensive, time-consuming, Expensive, time-consuming,

environmentalenvironmental

problemproblem

►Extended Gate HoursExtended Gate Hours Allows use of roadway capacity during off-Allows use of roadway capacity during off-

commute hours.commute hours.

Relieve Port CongestionRelieve Port Congestion

►Congestion Pricing Congestion Pricing Deter use of port, roadway, and rail capacity Deter use of port, roadway, and rail capacity

during peak traffic hoursduring peak traffic hours Freight can move more quickly without Freight can move more quickly without

causing so much friction with the urban causing so much friction with the urban environment environment

e.g. PierPASS programe.g. PierPASS program

►Off-Dock Container YardOff-Dock Container Yard Allowing container storage dwell time to be Allowing container storage dwell time to be

split across more facilitiessplit across more facilities

Relieve Port CongestionRelieve Port Congestion

► Expanded Rail ConnectionsExpanded Rail Connections Expanding rail connectivity, including rail Expanding rail connectivity, including rail

operating yards, mainline access tracks, and operating yards, mainline access tracks, and switching and routing tracksswitching and routing tracks

Allow more efficient placement of railcar Allow more efficient placement of railcar resources against demand, and more efficient resources against demand, and more efficient train movement across the entire systemtrain movement across the entire system

► Fast Rail Shuttles Fast Rail Shuttles Deployment of rapid inland rail shuttles, moving Deployment of rapid inland rail shuttles, moving

containers between the port area and inland rail containers between the port area and inland rail complexes complexes

Reconsolidation and distribution can be done Reconsolidation and distribution can be done more efficiently than in the tight confines of the more efficiently than in the tight confines of the portport

Relieve Port CongestionRelieve Port Congestion

►High-Speed GatesHigh-Speed Gates Automated high-speed gates that rely on optical Automated high-speed gates that rely on optical

character recognition, digital imaging, and other character recognition, digital imaging, and other technologies to speed truck processing and technologies to speed truck processing and integrate truck/terminal operationsintegrate truck/terminal operations

Speed truck movement and make off-peak truck Speed truck movement and make off-peak truck movement more effective and economical movement more effective and economical

► Integrated Maritime and Rail MovementIntegrated Maritime and Rail Movement Tighten the linkage between the maritime Tighten the linkage between the maritime

movement and the rail movementmovement and the rail movement Rail cars can be made available when containers Rail cars can be made available when containers

are ready, and containers are ready to move are ready, and containers are ready to move when rail equipment is in place.when rail equipment is in place.

SourcesSources

►Thomas Ward, Port Congestion Thomas Ward, Port Congestion Relief:Attacking the Entire Chain, JWD Relief:Attacking the Entire Chain, JWD Group, a division of DMJM Harris (Group, a division of DMJM Harris (http://www.dmjmharris.com/media/44http://www.dmjmharris.com/media/4437.pdf37.pdf))

►Patrick Alderton, Port Management Patrick Alderton, Port Management and Operations, LLP, 2005and Operations, LLP, 2005

Works CitedWorks CitedArmbruster, William “Polishing the Apple” Armbruster, William “Polishing the Apple” Traffic World Traffic World 24 October 2005: 20-26. 24 October 2005: 20-26.  Broder, John. M. “ At Nations Ports, Cargo Backlog Raising Question of Security.” Broder, John. M. “ At Nations Ports, Cargo Backlog Raising Question of Security.”   New York Times New York Times 27 July 2004: 12. 27 July 2004: 12.  D’Innocenzion, Anne “Cargo Backup to affect holidays”- Toys, other items stuck in D’Innocenzion, Anne “Cargo Backup to affect holidays”- Toys, other items stuck in

two two   ports. ports. Chicago Tribune Chicago Tribune 15 November 2004: 1.15 November 2004: 1.  Dougherty, Geoff “New Routes For Freight.” – Alternative shippers move full Dougherty, Geoff “New Routes For Freight.” – Alternative shippers move full

stream stream   ahead find other ways to move freight. That’s boosting some all-water shipping ahead find other ways to move freight. That’s boosting some all-water shipping   services and or air cargo volume, spurring new rail networks. services and or air cargo volume, spurring new rail networks. Chicago TribuneChicago Tribune   27 June 2005: 1.27 June 2005: 1.

““Electronic Truck ID for West Coast Ports.” December 2003. Electronic Truck ID for West Coast Ports.” December 2003. http://www.caltradereport.com/eWebPages/front-page-1071171246.htmlhttp://www.caltradereport.com/eWebPages/front-page-1071171246.html. .

Guido, Daniel W. “ With So. Calif. Ports Jammed, Others Jockey to Gain Overflow.” Guido, Daniel W. “ With So. Calif. Ports Jammed, Others Jockey to Gain Overflow.”   Transport Topics Transport Topics 30 May 2005: 11-12. 30 May 2005: 11-12.  Hays, Constance L. “US Retailers Feel the Pinch of Cargo Caught in Transit Snags.” Hays, Constance L. “US Retailers Feel the Pinch of Cargo Caught in Transit Snags.”   New York TimesNew York Times 26 October 2004: 1. 26 October 2004: 1.  Johnson, Eric. “Ports’ Pollution Outpaces Politics.” Region Growing Ship Traffic Johnson, Eric. “Ports’ Pollution Outpaces Politics.” Region Growing Ship Traffic   Exacerbates Problem- Policy Progress Slow, Exacerbates Problem- Policy Progress Slow, Long Beach PressLong Beach Press 27 February 27 February   2005: A1.2005: A1.  MonGelluzzo, Bill “LA-LB Reports Volume Gain.” MonGelluzzo, Bill “LA-LB Reports Volume Gain.” Traffic WorldTraffic World 31 October 2005: 31 October 2005:   39.39.  O’Reilly, Joseph “East Side Story: Oceans New Direction” June 2005 O’Reilly, Joseph “East Side Story: Oceans New Direction” June 2005 Inbound Logistics Inbound Logistics 2222        February 2006February 2006 <http://www.inboundlogistics.com/articles/features/0605_feature01.shtml<http://www.inboundlogistics.com/articles/features/0605_feature01.shtml  White, Ronald, D “US Ports Stormed by Wave of Imports”- Cargo Container Traffic White, Ronald, D “US Ports Stormed by Wave of Imports”- Cargo Container Traffic

““Shipping’s Dirty Cargo.” March 2006. Shipping’s Dirty Cargo.” March 2006. http://www.sfgate.com/cgi-bin/article.cgi?fhttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/03/04/BUGCQHIA0D1.DTL&hw==/c/a/2006/03/04/BUGCQHIA0D1.DTL&hw=port&snport&sn=003&sc=617=003&sc=617..

  Swells to Record, Raising New Concerns about Congestion. Swells to Record, Raising New Concerns about Congestion. Chicago TribuneChicago Tribune    6 February 2006: 1.6 February 2006: 1.

““West Coast Port Congestion Addressed with OffPeak Program.” January 2006. West Coast Port Congestion Addressed with OffPeak Program.” January 2006. http://www.recyclingtoday.com/news/news.asp?ID=8984&SubCatID=12&CatID=3http://www.recyclingtoday.com/news/news.asp?ID=8984&SubCatID=12&CatID=3..

““West Coast Cargo Flow Recovers.” August 2005. West Coast Cargo Flow Recovers.” August 2005. http://www.labournet.net/docks2/9908/recover.htmhttp://www.labournet.net/docks2/9908/recover.htm..

SourcesSources

►http://www.sfgate.com/cgi-bin/article.chttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/03/04/BUGCQHIA0D1.Dgi?f=/c/a/2006/03/04/BUGCQHIA0D1.DTL&hw=port&sn=003&sc=617TL&hw=port&sn=003&sc=617