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Port Problems: Ships Are Getting Bigger, Dwell Times Getting Longer

West Coast port holdups have been a prime point of concern of late as orchestrated slowdowns and lack of a labor contract have already begun to disrupt deliveries in advance of the holiday season.

Dockworkers’ International Longshore Warehouse Union (ILWU) initiated scheduled work slowdowns at Seattle and Tacoma ports last week following the latest round of talks about a new contract, but the pending contract is just one problem affecting the ports.

In a presentation at the United States Fashion Industry Association’s (USFIA) annual Textile and Apparel Importer Trade and Transportation Conference Wednesday, titled, “Big Ships, Big Problems: How Will Mega-Ships and Alliances Affect Import Rates and Service?” Joseph Bonney, senior editor of the Journal of Commerce, said increasing ship size, diminishing drivers and infrastructure issues are key concerns.

Growth in ship size is the first problem at the ports. In four years, Trans-pacific ship size has increased 16 percent to 6,250 twenty-foot equivalent units (TEUs) in 2014, a number triple that of 20 years ago. In 2015, growth in TEU is forecast to hit 6.4%, and in 2016, 6.6%.

“The trend toward bigger ships is irreversible,” Bonney said. Ocean carriers are seeking to cut costs in the face of stagnant import rates, so bigger, more efficient ships are becoming the new norm.

Larger ship designs reduce the amount of wasted space and slow steaming, or operating at less than maximum speed. But the big ships have more container lifts per vessel, which means it takes longer to get goods off of ships—up to three or four days. Bonney said, carriers could look at tightening capacity through lay-ups or skipping voyages, although volume growth could exceed expectations.

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In terms of infrastructure, Bonney said operations are out of sync with demand.

Carriers have started offloading ownership of chassis to leasing companies in another effort to cut costs, leaving chassis supply influx. At times, ships arrive and no chassis are available to work them. And the inefficiency and ultimate delays are causing drivers to flee the industry.

Bonney explained that one carrier recently hired a new driver on a Monday, and by Wednesday, the driver resigned saying he couldn’t put up with the delays. “That’s really an issue and it’s going to have to be solved for the good of the supply chain,” Bonney said.

And all of these issues collectively have led to a considerable increase in dwell times in the first six months of this year. In terms of imports, the time until cargo was available for pickup was up 61.68% over last year in Long Beach to 20 hours and 55 minutes, and up 26.51% in Los Angeles to 4 hours and 55 minutes. In New York, which has picked up some shipments rerouted to avoid West Coast ports, dwell time has increased 35.04% to 7 hours and 40 minutes.

Time until the goods are out of the gate has increased 20.42% to 17 hours and 55 minutes in Long Beach, 17.32% to 15 hours and 35 minutes in Los Angeles and 37.92% in New York to 1 day, 13 hours and 45 minutes.

The port problem is everyone’s problem, Bonney said, and everyone will have to give something to solve it.

Ocean carriers may have to pay more, terminal operators may have to extend gate hours so more ships can get in and out, and motor carriers will have to have better organized dispatching, possibly even an appointment system at the gates, Bonney said.

Bonney summed up his talk by saying, “Those of you shipping are going to have to pay more, whether in rates or delays for goods,” what Hubert Wiesenmaier, executive director of the American Import Shippers Association (AISA) who introduced and then thanked Bonney referred to as “some pretty comprehensive bad news.”

The big question will be, Bonney added, “Who pays and how are these costs allocated?”