The cargo surge that began with the COVID-19 recovery in mid-2020 forced US ports to develop a new playbook to cope with the unprecedented port and inland supply chain congestion that resulted, according to APM Terminals.

Ports may have to rely on long-dwell container fees and temporary storage of containers at near-dock yards as long as congestion persists

Topic: LA-LB, NY-NJ at or near normal cargo fluidity: APM Terminals

The US’ two largest container gateways, Los Angeles-Long Beach and New York-New Jersey, are quickly returning to pre-pandemic efficiency levels, although it will take some time for ports along the South Atlantic and Gulf Coast to achieve more normal cargo flow, according to APM Terminals (APMT).

Leo Huisman, APMT’s managing director/Americas region, said the main lessons learned over the past two years of dealing with congested terminals and vessel backlogs are that ports may have to charge fees for long-dwelling containers, maintain near-dock and off-dock temporary storage sites for containers, and establish peel piles and dray-off programs to reduce dwell times at marine terminals when congestion flares.

“The health of a terminal is driven by dwell times,” Huisman told JOC.com in an interview Friday. APMT has terminals at Los Angeles; Elizabeth, New Jersey; Miami; and Mobile, Alabama.

The ports of Los Angeles and Long Beach are congestion-free and can handle more cargo when it materializes. “There is no congestion. Zero. Zip. This gateway is fluid,” Huisman said.

Declining import volumes are contributing to reduced congestion in Los Angeles-Long Beach. US imports from Asia moving through West Coast ports fell 1.69 percent this year through September, according to PIERS, a JOC.com sister product within S&P Global, due in part to cargo diversions linked to protracted longshore contract negotiations.

New York-New Jersey should be back to normal cargo flow in two or three weeks as vessel backlogs are cleared and inland bottlenecks addressed, Huisman said. However, South Atlantic ports and Houston are struggling to handle cargo diverted from the West Coast, so clearing the vessel backlogs and terminal congestion in those spots may require a couple of months, he added.

COVID forces ports to adopt a new playbook

The 20 percent-plus surge in cargo volumes that began with the COVID-19 recovery in mid-2020 forced ports to develop a new playbook to cope with the unprecedented port and inland supply chain congestion that resulted, Huisman said. However, the measures that ports and terminal operators introduced over the past two years to reduce container dwell times had both upside and downside impacts on their customers, he said.

Huisman cited charging retailers and other importers fees for containers that dwell at terminals after free storage time expires. The fees, or even just the threat of fees, at ports on all three coasts have gone a long way toward reducing the stacks of long-dwelling containers, he said.

For example, the ports of Los Angeles and Long Beach have threatened to impose long-dwell fees for more than a year, but have yet to do so. Nevertheless, the average dwell time for containers that leave Los Angeles-Long Beach marine terminals by truck was 3.5 days in October, or about half the dwell earlier in the year, according to the Pacific Merchant Shipping Association.

On the other hand, ports and terminal operators would prefer to achieve efficiency at their facilities through incentives rather than the threat of penalties, Huisman said.

Near-dock storage another weapon

Los Angeles-Long Beach and other gateways have been successful in encouraging importers to dray their containers to near-dock sites for temporary storage until the boxes can be accepted at warehouses and distribution centers.

“When there is cargo sitting on the terminal, you need these relief valves, but they’re expensive and they’re inefficient,” Huisman said. That is because importers must pay a drayperson twice, first to move the containers to the temporary storage yards and then to the warehouses when the containers can be accommodated.

By contrast, APMT is a big fan of peel piles, Huisman said. The process requires a coordinated effort by ocean carriers to stow in one location on their vessels containers that are designated for peel piles, a commitment by the terminal to assign the appropriate labor and equipment to the peel piles, and agreement by truckers to designate sufficient drivers to the operation.

Jon Poelma, APMT’s managing director in Los Angeles, said peel piles improve trucker turn times because each driver moves directly to the pile and takes delivery of the next available container rather than having to drive deep into the terminal in search of a specific container.

“The less the hunting and pecking, the more efficient you can be,” Poelma said.

For much of the past year, terminal operators in Los Angeles-Long Beach dealt with chassis shortages, but that is not much of a problem now as new chassis are continually being delivered to Southern California.

“We don’t have a chassis shortage at the port, but inland there is a chassis shortage,” Huisman said, referring to equipment problems at railyards in Chicago and other inland ramps.