Port congestion is a persistent problem plaguing North America’s supply chain and the FMC chairman wants stakeholders to come to the table to find a solution.
Port congestion is a top priority at the Federal Maritime Commission (FMC) for 2015, emphasized FMC Chairman Mario Cardero during a speech at the American Apparel & Footwear Association’s (AAFA) 13th Annual International Sourcing, Customs, & Logistics Integration Conference in Washington, DC on April 14.
Consequently, the Commission is encouraging broad-based stakeholder collaboration, locally and regionally, to come up with solutions, and recently permitted an amendment to the cooperative working agreement between the Ports of Long Beach and Los Angeles to become effective much earlier than it would have otherwise.
“The amended Agreement will help the Ports and stakeholders address some of the many causes of port congestion, including coordinating the arrival of large vessels, addressing issues of chassis availability, coordinating programs to reduce truck congestion, and working with railroads to increase efficiency in getting containerized cargo to and from America’s heartland,” Cardero said.
FMC Chairman Mario Cardero
While the tentative agreement with respect to the labor negotiations at West Coast ports has helped accelerate cargo movements, Cardero remarked that it does not eliminate the impact of congestion on importers, exporters, carriers, terminals and international supply chains. The reason: The world’s container port volume is twice as large today as it was 10 years ago, and container throughput at US ports reached 31 million TEUs in 2014, with contents valued at almost a trillion dollars. “That volume will only increase over time,” he said, describing how correspondingly, the world’s containership fleet keeps growing.
“Vessels capable of carrying approximately 14,500 TEUs call at the Ports of Los Angeles and Long Beach and discharge thousands of containers with each call,” he remarked. “Sometimes the number of TEUs discharged exceeds more than half of their capacity.”
Despite the economies of scale larger vessels offer, the discharge of thousands of containers at one time presents serious challenges to terminal operators and drayage truckers.
“The effects of container surges produced by the use of ultra-large vessels, unfortunately, have been exacerbated by chassis unavailability, trucker shortages, and lack of adequate investment in port-related infrastructure,” he said. “In short, even with a new labor contract in place on the West Coast, America still needs to address mid-term and longer-term congestion issues or face substantial reductions in our ability to compete effectively in the global economy.”
For these reasons, last fall the Commission hosted four regional forums around the country to begin a dialog with its stakeholders, including public port authorities, terminal operators, trucking companies, railroads and maritime labor.
“As a result we learned more about the varied causes of congestion, Cardero said. “The forums pointed up the need for port stakeholders to work together to develop efficient and sustainable ways to address congestion concerns.”
Currently, the FMC is studying the causes and effects of congestion based in part on the comments provided by stakeholders at the congestion forums. One is how cargo owners and their trucking companies have had to pay demurrage and detention charges even when they are prevented from picking up their containers or returning empty containers.
In response to the volume of these complaints, the FMC staff has prepared a report on demurrage and detention rules, rates and practices, which Cardero announced is available to the public and easily downloaded from [url=http://www.fmc.gov/]http://www.fmc.gov/[/url].
“The Commission will have the opportunity to consider what further steps, if any, it will take on those and other congestion issues,” Cardero reported.
He outlined how even the country’s biggest ports capable of handling the world’s largest vessels are only as efficient as the least productive link in the landside infrastructure on which they depend.
“Without the transportation infrastructure necessary to move cargo swiftly off dock and to its destination, whether by truck, rail, or barge, more cargo on larger ships will lead to more congestion,” he said. “In the near term, however, it appears that solutions to some of the causes of congestion will have to come through the joint efforts of stakeholders to produce efficiencies with resources they have pending infrastructure funding.”
Cardero also discussed the Obama Administrations six-year $478 billion surface transportation reauthorization proposal, known as the Grow America Act, which has been added to the federal 2016 budget. Out of that $478 billion, a total of $7 billion will be made available over six years for transportation projects across the country under the highly successful Transportation Investment Generating Economic Recovery (TIGER) competitive grant program.
For each of the six years through 2021, $1.25 billion is allocated. This amount is $750 million greater than the $500 million enacted for 2015.
“While the TIGER grant program is better funded, it does not meet the funding needs that our port infrastructure requires,” Cardero said. “However, the TIGER grant program can serve as a model for a program dedicated to port infrastructure projects.”
