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Port Congestion. McKenzie Schwitzer Kaleigh Martens Justin Beckman Yong Sun Yoo. Introduction to Port Congestion. The Causes of Port Congestion are Many and Varied. Increased Demand for Container Shipping Port Constraints Poor Management Strikes and other work related problems
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Port Congestion McKenzie Schwitzer Kaleigh Martens Justin Beckman Yong Sun Yoo
The Causes of Port Congestion are Many and Varied • Increased Demand for Container Shipping • Port Constraints • Poor Management • Strikes and other work related problems • Too many vessels are being directed at a port • The construction of the vessel • How containers are loaded and unloaded • Scheduling • Truck driver shortage • Pollution • Major influencing retailers on congestion
Increases in Demand for Container Shipping • Increases in International Business over the past years has created more demand for ocean shipping • Cost savings from cheaper labor, lower cost of resources, operating efficiency, and increased global promotion of trade with trade agreements like NAFTA • Important to many companies to remain in a competitive market
Constraints on Port Capacity • Problems with limited location • Too many vessels are being directed at a port and the port has to service all types of vessels • The construction of the vessel also has a lot to do with the way containers are loaded and offloaded on to the vessel • The general size of shipyard • Demand for service • Infrastructure and inland transportation
Poor Management • Poor management and planning is another factor that leads to delays and backlogs • There is a high turnover of management at the container terminal • Casual workers • Workers that are casual they do not receive substantial employment benefits • no training and lack of experience
Ship Size • Benefits of larger ships • Able to carry more cargo • Economies of scale • Universal containers • Problems with ship size • The ship travel speed • There is limited port usage • Terminal size • Water depth • Port equipment-larger cranes • scheduling problems
Truck Driver Shortage • Hard to find drivers • Low rate of pay • Rate of turnover is more than 100% • Long hours and weekend work • Traffic tie-ups • Delays on highways because of congestion and bottlenecks on highways cost the trucking industry an estimated $7.8 billion in 2004 • Truck driver shortage • There are not a sufficient amount of truck drivers to drive the trucks after the shipments have been delivered to the ports
West Coast Port Congestion • Dramatic increase in imports from Asia • Due to cheaper labor = cheaper product • Labor Shortages when unloading ports
Labor Problems with West Coast • International Longshore & Warehouse Union members & tentative contracts • Slowed down their work • Not enough people are working late shifts • Most people are being overworked whether they work at the terminal or drive a truck • Aren’t enough drivers to drive the trucks once products are brought into the port • Aren’t enough rail lines either • Forces major delays & problems of not having products when needing them
Problems with PortsPollution • Cargo ships using heavy bunker fuel • Diesel powered trucks • People living under the smog near LA & LB ports tend to have respiratory & cardiovascular problems
Problems with Port Pollution • International Longshore & Warehouse Union (ILWU) has launched a campaign to clean up the air pollution • Want to have ships reduce harmful emissions by reducing idling times • Wants cleaner fuels for terminal equipment • Wants 20% reduction of ship pollutants by 2010 • Shipping companies & terminals have said they are working hard to help
Electronic Truck ID • 2003 – Long Beach introduced a new wireless truck ID system • Increase safety, security, & efficiency • Immediately transmits information as soon as a truck pulls into a marine terminal & is supposed to reduce time trucks are there to pick up or drop off containerized cargo • Will help reduce emissions created by idling trucks as well
Offpeak Program • Began in July of 2005 due to port congestion on the West coast & the 40% increase in imports between 2000 & 2004 • Helping to move more activity from both ports from conventional business hours to off hours • Any shipper who moves cargo between 3AM-6PM is assessed an $80 TMF (40ft. Container) & a $40 TMF (20 ft. Container) on Monday-Friday. No fees for shipments outside these hours. • Also doing this to reduce smog during normal business hours
Offpeak Program • Paul Sherer (spokesman for Offpeak) has said that a 1/3 of the shippers have moved to off hours. • Truck drivers enjoy this because they are now able to make more runs during the day • More than 1 million trucks trips have been diverted from peak daytime shipment to offpeak
Diversion of Cargo • Due to high container growth, tight capacity & rising fuel costs at LA and LB shippers and carriers are being routed to other ports • Most shippers & carriers are re-routing to the East coast, but some are going to Northern California ports • LA and LB had previously handled 40% of all imports from Asia
Major influencing retailers on Congestion • Walmart--- sell highest volume of products. • Loss of business devastating during the Christmas holidays. • Build Distribution Centers allowing to ship through canals to avoid Pacific Coast Ports. • Home Depot has also adopted this strategy as a retailer. • Sears is an example of a retailer who has shipped to the east coast ports to avoid congestion problems in the west. • Problems for retailers all centers around Just in Time Inventory
Problems for Just In Time Inventory • If products have to sit for 4 to 7 days this may result in loss of business. • Sitting at ports results in large warehouse costs for retailers • It also costs ship owners a large amount of money to have their assets sitting loaded at ports. (Turnaround time is poor)
More problems tied to Just in Time Inventory • Example • The Union Pacific Railroad • Loosing half of their employees due to retirement • Many containers are being loaded onto railcars • Hiring new employees results in high training costs in order to have a effective and efficient workforce
Port of New York/New Jersey • Ability to improve capacity of port by: • Dredging (most terminals to 45 feet) • Larger vessels to call at the port (for this to be effective ports must remain congestion free) • This leads to more capacity for ships • Reconfiguration of the port terminals • Virtual inspection system (allows quicker movement through the gate • Ability to weigh and take pictures of trucks • Expansion of physical infrastructure • Faster more efficient movement of goods • Additions of new cranes and other equipment to improve efficiency
Port of New York/New Jersey(continued) • Dramatic reduction in turnaround time for trucks • Reduction from 6 hrs in 2004 to around one or one and half hours in 2005 • The completion of a new ExpressRail terminal in Elizabeth • Provides on-dock or near-dock service at the terminals • Containers are easily put on trains within the terminal or just outside of • 2nd part is creation of a storage facility allowing the number of trains serving the port to increase
Statistics of East Coast Ports • 16.2 billion TEU’s on the West Coast • 11.8 billion TEU’s for the Top six container ports in the East. (NY/NJ, Charleston, Hampton Rds, Savanna, Miami, and Montreal) • Container volume on the East coast only exception being NY/NJ has been measured and the ability to scale growth initiatives to meet demand.
Relieve Port Congestion • Port Development • Expand capacity: New port, Dredge • Expensive, time-consuming, environmental problem • Extended Gate Hours • Allows use of roadway capacity during off-commute hours.
Relieve Port Congestion • Congestion Pricing • Deter use of port, roadway, and rail capacity during peak traffic hours • Freight can move more quickly without causing so much friction with the urban environment • e.g. PierPASS program • Off-Dock Container Yard • Allowing container storage dwell time to be split across more facilities
Relieve Port Congestion • Expanded Rail Connections • Expanding rail connectivity, including rail operating yards, mainline access tracks, and switching and routing tracks • Allow more efficient placement of railcar resources against demand, and more efficient train movement across the entire system • Fast Rail Shuttles • Deployment of rapid inland rail shuttles, moving containers between the port area and inland rail complexes • Reconsolidation and distribution can be done more efficiently than in the tight confines of the port
Relieve Port Congestion • High-Speed Gates • Automated high-speed gates that rely on optical character recognition, digital imaging, and other technologies to speed truck processing and integrate truck/terminal operations • Speed truck movement and make off-peak truck movement more effective and economical • Integrated Maritime and Rail Movement • Tighten the linkage between the maritime movement and the rail movement • Rail cars can be made available when containers are ready, and containers are ready to move when rail equipment is in place.
Sources • Thomas Ward, Port Congestion Relief:Attacking the Entire Chain, JWD Group, a division of DMJM Harris (http://www.dmjmharris.com/media/4437.pdf) • Patrick Alderton, Port Management and Operations, LLP, 2005
Works Cited Armbruster, William “Polishing the Apple” Traffic World 24 October 2005: 20-26. Broder, John. M. “ At Nations Ports, Cargo Backlog Raising Question of Security.” New York Times 27 July 2004: 12. D’Innocenzion, Anne “Cargo Backup to affect holidays”- Toys, other items stuck in two ports. Chicago Tribune 15 November 2004: 1. Dougherty, Geoff “New Routes For Freight.” – Alternative shippers move full stream ahead find other ways to move freight. That’s boosting some all-water shipping services and or air cargo volume, spurring new rail networks. Chicago Tribune 27 June 2005: 1.
“Electronic Truck ID for West Coast Ports.” December 2003. http://www.caltradereport.com/eWebPages/front-page-1071171246.html. Guido, Daniel W. “ With So. Calif. Ports Jammed, Others Jockey to Gain Overflow.” Transport Topics 30 May 2005: 11-12. Hays, Constance L. “US Retailers Feel the Pinch of Cargo Caught in Transit Snags.” New York Times 26 October 2004: 1. Johnson, Eric. “Ports’ Pollution Outpaces Politics.” Region Growing Ship Traffic Exacerbates Problem- Policy Progress Slow, Long Beach Press 27 February 2005: A1. MonGelluzzo, Bill “LA-LB Reports Volume Gain.” Traffic World 31 October 2005: 39. O’Reilly, Joseph “East Side Story: Oceans New Direction” June 2005 Inbound Logistics 22February 2006 <http://www.inboundlogistics.com/articles/features/0605_feature01.shtml White, Ronald, D “US Ports Stormed by Wave of Imports”- Cargo Container Traffic “Shipping’s Dirty Cargo.” March 2006. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/03/04/BUGCQHIA0D1.DTL&hw=port&sn=003&sc=617. Swells to Record, Raising New Concerns about Congestion. Chicago Tribune 6 February 2006: 1. “West Coast Port Congestion Addressed with OffPeak Program.” January 2006. http://www.recyclingtoday.com/news/news.asp?ID=8984&SubCatID=12&CatID=3. “West Coast Cargo Flow Recovers.” August 2005. http://www.labournet.net/docks2/9908/recover.htm.
Sources • http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/03/04/BUGCQHIA0D1.DTL&hw=port&sn=003&sc=617