With port calls by bigger containerships and growing demands of federal mandates, the drayage business is facing mounting challenges that Jim Kramer, senior vice president for commercial at ContainerPort Group, is tackling head-on.
The venerable Cleveland-based provider of intermodal container and cargo solutions is heightening the role of inland terminals and taking steps to maintain productive truck capacity in an era when the expanded Panama Canal is leading to throughput surges at already-stressed ports and electronic logging requirements and other rules are boding to have further worrisome impacts.
For Kramer, who grew up a stone’s throw from Baltimore’s Dundalk Marine Terminal, a proactive approach is seen as the way to win in what he admits is a constant struggle to retain its truck capacity, while continuing to recruit additional capacity to handle increased opportunities and sustain reliable, cost-efficient cargo movement.
In an interview with the American Journal of Transportation, Kramer offers his views on meeting industry challenges in testing times and provides some personal insights.
With the expanded Panama Canal opening this month, what impacts do you see on CPG and its intermodal network?
We certainly are anticipating an increase in the trans-Pacific cargo directly into the East Coast ports that we serve – New Jersey, Philadelphia, Baltimore, Norfolk and Savannah.
Of course, the big question is: What will this increase look like? And that’s still unanswered.
With vessel sizes increasing, weekly service calls into the East Coast ports would most likely decrease.
So decreased calls, but more boxes per call…
That will equate to, in some cases, further congested terminals.
I don’t think the West Coast ports and the West Coast rails will sit idly by and watch their cargo volumes decrease without a plan to somehow retain and grow their market share.
If the ILA [International Longshoremen’s Association] and the PMA [Pacific Maritime Association] come to an agreement on extending their current contract, it could impact a lot of decisions by the BCOs [beneficial cargo owners] to continue diverting cargo to the East Coast.
That said, as ocean carriers continue their efforts to slow the decline in ocean rates and look to gain required market share as their vessel sizes increase, we expect them to be more flexible in their East Coast calls.
In the end, it’s all about keeping costs down, reducing transit times and improving service levels.
The larger question is whether East Coast terminals can handle the additional cargo off of larger ships without negatively impacting their terminal velocity. Because, as you and I both know, supply chains can’t absorb further disruptions.
We’ve seen a number of East Coast ports really step up in their investment in infrastructure and on terminal processes while others are really slow to change.
A critical question is: How will labor rise to the challenge to improve their port productivity? Without improvements to the gate and terminal velocity, specifically the process of servicing the drayage sector, the gains of infrastructure improvements will not be fully realized.
ContainerPort Group continues to expand, specifically in the South Atlantic and the Gulf regions, in order to position itself for the future. We see the South Atlantic and the Gulf Coast regions as continuing to play an important and ever-expanding role, even more so with the opening of the expanded Panama Canal.
Do you expect inland terminals to continue to play a growing role in the shipping industry, and how is CPG responding?
We do expect inland terminals – and especially our strategic network – to continue to play a critical role.
Since our beginning in 1971, CPG’s inland terminal services product has been one of our core offerings to the international and domestic shipping sector. Our state-of-the-art depot management system provides real-time updates and customized reports. Our network of secure, full-service facilities offer international and domestic container drayage services, loaded and empty container and trailer storage, repairs and container modifications. We operate a strategic network in major markets throughout the Midwest, Ohio Valley, Northeast and South Atlantic coasts.
How is CPG meeting challenges faced at ports by truckers, including draymen?
The challenge for CPG, and frankly for all drayage companies operating out of East Coast ports, is terminal velocity.
While a number of ports in which we operate today have made and continue to make improvements to both their terminal yard infrastructures and their intermodal connectors, there are a few that are regrettably lagging behind in that regard and continue to present a challenge to the drayage industry on a daily basis.
Our goal obviously is to keep our trucks moving, and keeping them in compliance with DOT [U.S. Department of Transportation mandates] regulations is extremely important to CPG.
What about situations where a driver needs to make three turns a day to make a living but is lucky to get in one?
When the issue is port congestion, we are forced, along with many draymen, to implement a port congestion surcharge in those terminals where we have to keep the trucks compensated for unproductive in-terminal waiting time.
If our trucks can’t make the number of turns per day required to make a living wage or be compensated for waiting time beyond their control, they will either leave and hire on with another drayage carrier who might promise higher earnings; leave for a truckload carrier, avoiding those delays outside their control, really the port; or they’ll get out of trucking altogether, further exacerbating what will become a tighter capacity market.
We’ve seen it in the past, and I would suspect that in the second half of 2016 to first quarter of ’17 that capacity will tighten again, as the economy continues to improve. Our economy is moving along, not at the pace it needs to, but it won’t take much to put the drayage industry back into a very tight capacity model.
This challenge requires a great deal of planning into every dispatch to ensure that those things that we can control are worked on in order to help keep the driver moving in and out of the piers.
To your point, if they don’t make their required turns, they’ll leave the drayage industry.
In order to position ourselves to handle current and new opportunities for our valued customers, we focus on capacity retention and recruitment. Beyond a solid compensation package for our fleet, we have a number of safety and longevity incentive plans which are designed to retain and recruit capacity. We believe our recruitment model is one of the best in the drayage industry.
Having been with CPG for 35 of its 45 years in existence, what are some of the most salient changes you have seen in the marketplace over the past decades?
There are a number, but, if we had to pare it down to a handful, I think the ocean carrier alliances that continue to evolve; the chassis model we are currently under, now that the ocean carriers are no longer owning their own chassis and providing them as part of the service contracts, and the model has changed in most cases to pool or trucker wheels, and CPG continues to invest in chassis in particular regions; and the DOT regulations, with the challenges of CSA [Compliance, Safety, Accountability program] and, coming down the pike, electronic logs, which will be fully implemented by the end of 2017.
We have already started implementing ELDs [electronic logging devices] in some of our locations. We’d rather not wait until the last minute. We’ve taken a proactive approach and already started the rollout.
We are 100 percent behind the ELD mandate, but the industry has to recognize that it will have a significant impact on driver productivity. The driver has to manage his time and the company has to manage its dispatches at a higher level to avoid delays in shipments.
How has your own educational background – with a bachelor’s in business administration, labor relations and human resources from the University of Baltimore and most recently a master’s in intermodal transportation from the University of Denver – prepared you for your work at CPG?
It’s really provided me a deeper understanding of the various modes of transportation and has broadened my understanding of, in particular, the ocean and rail modes and some of the challenges each is confronted with.
It was an intense few years but certainly worthwhile from an educational and networking perspective.
What do you like to do in your nonwork hours, assuming you occasionally get a few?
I do like traveling, both internationally and throughout the U.S. One of the benefits of my job is that I do travel domestically to see our customer base, and that’s always enjoyable.
What’s the coolest place you’ve been?
I just got back from India in March, but I think the coolest place I’ve been to would be a tossup between Beirut and Havana. I always try to go off the beaten path. I prefer the road less traveled. I find it much more fascinating.
I have two daughters and two grandkids who still live in the Baltimore region, and brothers and sisters who live in the mid-Atlantic area, as well. My wife and I try to get back there as often as possible to enjoy time with the family.
I was born and raised outside Baltimore’s Dundalk Marine Terminal, which back in the ’50s was a small regional airport, and then converted over to a car and container terminal. Literally, I lived several hundred yards from it, and it’s just funny how I’ve ended up in the industry after growing up just outside Dundalk Marine Terminal.