As this issue of The Dispatcher was going to press in late November, longshore contract talks continued to be productive through the Thanksgiving holiday and were scheduled to immediately resume an intensive schedule in December. One issue impacting the talks is port congestion.
Peddling fear
Despite the fact that progress is being made on key issues at the negotiating table, a coalition of antiunion employer groups including the National Retail Federation, Chamber of Commerce and National Association of Manufacturers, have done their best to create a climate of fear by describing the negotiations as “toxic” and falsely claiming that “a shutdown of the ports is imminent.” Ironically, some of these same big retailers joined forces with employers in 2002 to shut the ports and lockout workers for 10 days – a fact conveniently omitted from their press releases.
False claims
Business groups are also blaming port congestion entirely on alleged worker slowdowns. And while some naive reporters have swallowed this misleading explanation, many longtime journalists and industry officials acknowledge that the congestion crisis has been brewing for years and stems from big industry changes involving new business models aimed at increasing efficiency and profits.
Chassis pool changes
Until recently, the big carriers maintained pools of their own chassis on the docks so they could easily be connected to containers, then hauled by port truckers to warehouses and distribution centers. Now the employers have changed their business model by assigning that chassis work to firms beyond the docks who are unable to deliver a safely maintained chassis to the right place at the right time – creating a major factor in the congestion crisis at many ports. But there are other problems as well, including unplanned increases in container volumes that are overwhelming many ports.
No speedy solution
“There will be no speedy solution to the congestion that is creating bottlenecks at ports around the world as terminals battle to cope with growing trade and surges in container volume,” declared Greg Knowler, Senior Asia Editor for the Journal of Commerce, the shipping industry’s “newspaper of record.” Knowler quoted a senior official at the Mitsui-Osaka Line (MOL) who cited larger ships and complicated new alliance structures as key factors in the congestion crisis. MOL is a member of the “G-6” alliance, one of several new efforts to combine formerly independent
carriers into mini-cartels.
More complexity
The Journal of Commerce noted that congestion increased this year because Asian exports have grown as the U.S. recession eased, sending greater volumes of containers on larger new ships that create surges when they’re unloaded. Also noted was the impact of new carrier alliances that seek to coordinate and consolidate cargo between different vessels.
“If you have six lines with six different services each connecting with other trades it just increases the complexity,” the MOL official told the Journal of Commerce, which concluded: “The big ship-alliance issue is creating havoc at ports across the world.”
Study points to volume
A separate Journal of Commerce report issued just before Thanksgiving, disclosed results from a detailed study of delays at the nation’s largest port complex in Los Angeles/Long Beach. “There have been no significant new congestion generators in six months,” according to Val Noronha, president of Digital Geographic Research Corporation, whose firm conducted the study.
“The research showed record delays are attributable to near-record volume.” Saturation capacity Senior Editor Bill Mongelluzzo concluded, “The troubling message to take away from Noronha’s research for the largest U.S. port complex, and for other large container gateways, is that growing container volumes carried by bigger ships that discharge their loads in a narrow window of time are forcing\ ports to their saturation capacity.”
More mega-ships coming
While Los Angeles and Long Beach are still reeling from new vessels carrying up to 14,000 TEU’s (twenty-foot equivalent container units), carriers are already launching their next generation of mega-ships, including a 19,000 TEU monster just built by Hyundai for China Shipping Container Lines (CSCL). The “Globe” is now the world’s largest, at over 400 yards long and 60 yards wide – but it’s just the first of five similar vessels that will initially serve Europe-Asia routes. The new super-ship carries 1,000 more containers than the previous record held by Maersk’s “Triple E” class. Just four years ago, Hyundai built the world’s first 10,000 TEU vessels, but has since built 82 larger ships – including the latest that are nearly double in size.