Efforts to keep the nation’s cargo moving and reduce bottlenecks will focus on data sharing and reducing long-term container storage at port terminals as the White House works through the country’s supply chain challenges.
“In the near term it really has to do with terminals because that’s where the congestion collects,” Gen. Stephen Lyons, White House Port and Supply Chain Envoy told attendees this week at the ASCM Connect Annual Conference in Chicago. “And if you can get terminals fluid, everything else starts to be fluid.”
Lyons pinned a good amount of the current terminal congestion on cargo owners saying the same group that bears the brunt of higher costs from congestion is also “the most significant underlying cause for congestion at terminals today” in the way of long-dwelling containers clogging the country’s ports.
Ports have attempted to address the issue raising the possibility of fees on long-dwelling containers. Southern California’s San Pedro Bay ports first introduced the idea last October. Nearly a year later, consideration of the fee program has been continually delayed in favor of monitoring the situation. The two ports most recently said it will postpone making a decision on instituting the fee to Sept. 23 and noted a 46 percent decline in long-dwelling containers since the program was first announced.
The Port Authority of New York and New Jersey looked to make a similar move in response to the congestion seen on the East Coast when it said last month it would implement a fee targeting carriers that fail to clear their empty containers from the docks. That program was set to go into effect Sept. 1 and has since been delayed.
“I won’t get into a deep discussion on detention and demurrage and fees and so forth and so on and free days at ports…. But I would just say this at the micro-transactional level, where most logistics professionals operate,” Lyons said. “For supply chain managers under pressure to cut costs, it may appear cheaper to store cargo at terminals. But, at the macro level, the congestion created, I guarantee you, is far more expensive both to the company and to the broader economy. That’s a long way of saying and asking for all of us to really encourage folks, supply chain managers inside shippers and beneficial cargo owners that are in the best position to improve supply chain performance in the near term, by picking up and moving their cargo and keeping freight in motion.”
Lyons’ call for shippers to stop using terminals as de facto warehouses for storing containers comes as the White House also focuses on data collection and sharing, which aims to address the issue of transparency within the industry. He cited a “level of opaqueness” that is creating challenges in keeping cargo moving.
“That’s the key. We need to get more transparent,” he said. “We need to understand what’s where and hold folks accountable and then incentivize them to commit to fluidity in a way that’s meaningful.”
Lyons said initially the idea of private companies sharing their data with the government and with competitors seemed akin to “Mission Impossible.”
“I’ve talked to folks that are part of the pilot; they’re very excited about it. There’s representation from each sector,” he said.
The program, he said, could be ready to expand beyond the roughly 25 pilot participants in about a month.
“I’m actually pretty excited,” Lyons said of the pilot. “If this pans out, it’ll be one of a kind that they’ll be studying for many years to come.”