Marine Transportation System

Posts Tagged ‘Marine Terminals’

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DPW Redux?

In Congress, Politics, Ports, Transportation Policy on May 12, 2016 at 10:50 pm

The trade press is reporting that a majority of shares of Ports America may be acquired by a corporation in Turkey, Yilport Holding Inc. The Istanbul-based corporation is part of a multi-industry holding company, its owner also a major investor in the French CMA CGM container shipping line, acknowledged the talks are occurring. Taking control of a major US terminal organization with around 40 operations around the country, would be a big move as compared to the UAE-based Gulftainer’s purchase of a small container terminal at Port Canaveral a few years back.

A better, if not perfect, analogy of a Mideast-based business making a move on a US MTO/stevedore would be the ill-fated move by DP World in 2006 to take over P&O Ports. At a time when American port security in a post-2001 world was still a very active subject in Washington the credible Dubai Ports World ran afoul of Chuck Schumer (D-NY) and others of both parties in Congress, including then-Senator Hillary Clinton (D-NY). Claims were made that it was a potential foot-in-the-door by a state-owned organization from a region that sponsored terrorism. The rhetoric was hot. The subject was raw meat for never-too-tired-to-talk radio.

P&O Ports had approved the acquisition and the transaction involving port leases required Federal government review and clearance by Treasury’s Committee on Foreign Investment in the United States (CFIUS). Despite those approvals, and the strong support of the George W. Bush White House, the issue became such a political firestorm — involving an industry little understood in Congress, it should be noted — that in the end DP World withdrew, selling P&O Ports’ American operations to AIG. (As it happens, those terminals eventually came under the Ports America name.)

A second, unfortunate casualty of the blowup was the Bush administration’s candidate to be Maritime Administrator. The respected David Sanborn had the doubly bad luck of 1) having his nomination considered in the Senate in this same time frame and 2) being an operations executive of — yes, that’s right — DP World.

So is this another potential “DP World” should Yilport and Ports America do a deal? Maybe not. Turkey is a member of NATO and a US ally, if not the best kind of ally, and more time has passed since that anxiety-filled first decade. But the situation does invite a recollection of a particularly crazy time here when the marine terminal industry and the international nature of the maritime sector were under the glaring, if not illuminating, lights of official US.

What is not especially evident is whether all that attention then led to a greater understanding of the industry today.

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Rx: Port Decongestant

In Competition, Government, Port Performance, Ports on April 14, 2016 at 1:14 am

The Secretary of Commerce received recommendations from her department’s Advisory Committee on Supply Chain Competitiveness (ACSCC). The paper: Recommendations to the Secretary of Commerce Regarding US Seaport and Connecting Infrastructure Congestion “for addressing and resolving” the “urgent national topic” of port congestion.

(From the humble perspective of a long time ports advocate in Washington, DC, home of the ten-ring circus, it is gratifying and reassuring that ports can sometimes make it to the spotlight and, even more, qualify as an urgent national topic…whether to the Commerce Secretary or to anyone. Not a bad career choice after all.)

Federal leadership is needed to advance a set of best port congestion reduction practices that the private and public owners and stakeholders of each port can individually adopt as appropriate. Our report contains a number of congestion reduction practices for this purpose. By advancing these practices, the Nation can achieve a comprehensive, holistic reduction in port congestion that improves national competitiveness and economic growth.

The February 4, 2016 transmittal letter to Secretary Penny Pritzker also noted that there is a limit to the role that Washington can play in addressing the issue but wanted to make the most of that role.

However, where Federal Government involvement can directly resolve port congestion issues, or reduce their impacts, Federal action should be swift and decisive.

The nine-page paper was drafted, discussed, and edited by the panel — a formal Federal Advisory Committee — over a good part of the previous year and then was approved at its January meeting. The folks who led the initiative are knowledgeable in freight logistics. And if certain others of the 30 to 40 persons usually present for the meetings had little personal knowledge of what happens in the life of an ocean shipping container it was explained to them.

(This is a good time to note that one sector that did not have a seat at that table is one that could have contributed greatly to the panel’s understanding of port terminal operations — the marine terminal industry. Further note: the newly selected class of ACSCC appointees to the 44 member advisory committee continues the seeming exclusion of representatives of the terminal industry.)

Port congestion, as it has come to be called, is a problem only in a few of the larger US ports but as those international gateways — New York/New Jersey, Los Angeles, Long Beach, Oakland, Virginia — handle a substantial share of the nation’s cargo, especially imports, slowed cargo throughput is a problem and can be costly to cargo interests and others involved in the port-centered supply chain. It is not that the other ports will never see port congestion. Others likely will, eventually. But even as this “urgent national” port topic has become an issue in Washington, and attracting the attention of multiple Federal agencies, most ports have seen none of the symptoms and few of the causes, of which there are many.

Simplistically, it might be compared to growing pains. Changes are happening to the port, terminal and other elements of the port-centered supply chain. Some of their moving parts are not moving as well as they had been. Cargo volumes are shifting. Shippers are diversifying ports of entry. Larger vessels mean more cargo to load or unload during one vessel call. Terminals were configured for the business of ten years ago. Ocean carriers relinquished ownership of chassis but not full control. A chassis or container depot is not convenient to the terminal. The truck driver makes multiple trips for one load. Drivers are told to to pick up the container when there might be better times to do it. Trucks spend hours in lines, sometimes needlessly. Discouraged drivers exit the business, causing shortages. Roads to the terminal are inadequate for the truck volume. Rail capacity is insufficient. Berths may work around the clock but gates do not because the container is destined for a warehouse not open until eight in the morning.

Throw in some sort of labor dispute (slowdown, etc) or a failure of the computerized terminal operating system and a combination of these factors can make for a quite a mess. The 2014-2015 West Coast experience during protracted labor contract negotiations — with two dozen and more ships at anchor offshore as evidence of the problem onshore — remains vivid in the minds of many whose cargo was slow to get to market and, in the case of farm exports, spoiled. The experience also is a vivid memory for  the people who worked to clear the ships and terminals of containers.

So, yes, there is a problem that some ports have been working to address. Indeed in those named ports multidisciplinary groups were organized to identify and tackle those problems. The first of those was the NY/NJ Port Performance Task Force, which for the implementation phase was succeeded by the Council on Port Performance.

The 2016 recommendations to Secretary Pritzker do not stand alone. In 2014, the Federal Maritime Commission heard stakeholders during four regional listening sessions, and later issued staff reports. The FMC is about to launch what may be its last initiative — Supply Chain Innovation Teams to “develop commercial solutions to supply chain challenges and related port congestion concerns” at the San Pedro Bay ports. In March of this year, the cabinet secretaries of Commerce, Labor and Transportation hosted an invitation-only, “21st century seaports roundtable” that was organized by the White House’s National Economic Council. Bills were introduced on Capitol Hill in 2015 and one — the Port Performance Act — eventually became law. The Department of Transportation’s Bureau of Transportation Statistics is now working on implementing the resulting Port Performance Freight Statistics Program. All of which can reasonably be attributed to the lobbying of cargo interests, with the help of trucking, who smarted from the West Coast port mess and wanted to see improvements that included, but not were limited to, workforce issues.

Committee members noted, during the discussion of this Report, that these measures can be used by the ACSCC to help the U.S. Department of Transportation to develop the set of port performance metrics required by the Fixing America’s Surface Transportation Act. The Committee also encourages the U.S. Congress to consider additional investment in last-mile infrastructure, new technologies and intelligent systems, and on-dock and near-dock facilities towards reducing U.S. port congestion.

The recommendations of “best practices” delivered to Secretary Pritzker, the details of which you can read here, apply to ocean carriers; terminal operations; port authorities; Federal, State and local government; chassis equipment management; motor carriers; and transportation planners. It is interesting to note that the recommendations apply to just about everyone in the port-related supply chain except the importers and exporters who, as happens, were the principal writers and proponents of the document.

One might wonder if others in the supply chain would have “best practices” to suggest to that shipper community. I think they would.

The Port Performance Task Force report engaged representatives of stakeholders from most aspects of the supply chain and came up with twenty-three recommendations to try to implement. Some of those recommendations, perhaps many, are true challenges, asking competing parties to cooperate in establishing shared solutions such as a truck management system (a.k.a. “appointments”) and chassis pools. Most of the recommendations have little to do with Federal or State government and much to do with improving commercial relationships, embracing new technology, sharing information, adjusting operations, improving communications, and respecting a negotiated labor contract. A few of those are in the recommendations to the Secretary.

The interest of Federal agencies in the port congestion issue is not a bad thing but it is misleading to label it “port congestion.” It is a supply chain problem. Why did the advisory committee recommendations go to the Secretary of Commerce? I suppose the reason is — like the banks to Willie Sutton — because she is there, and the panel exists to advise the Secretary. But as the transmittal letter admits, there is not much that the government can do. Outside of facilitating meetings and providing some assistance in funding infrastructure projects, the lion’s share of the work to be done is there in the supply chain, by the parties that make up the supply chain…and not just at the marine terminal.   Pbea

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Port Performance Under the Microscope

In Congress, Labor, Legislation, Ports on September 1, 2015 at 5:07 pm

I last wrote of how Washington policy makers and agencies grew more interested in the port sector and how ports, small and large, benefited by that attention. So let’s consider some recent and largely unwelcome attention.

The messy, prolonged West Coast contract talks and negotiating tactics that resulted in a dysfunctioning supply chain at the waterfront elicited a strong and prolonged backlash from the importers, exporters and others whose own operations depend on reasonably well-functioning ports. (“After all, shippers crave certainty, and they crave reliability,” the recently released Pacific Maritime Association annual report acknowledges.) Not that the shippers were taken by surprise. With the 2002, ten-day shutdown of the ports fresh in mind, they expected the worse and were diverting some cargo to gateways of other coasts (or countries) months into the talks.

You are familiar with the recent history. The talks between the PMA and International Longshore and Warehouse Union started in May 2014. A year later the ILWU rank and file gave the new contract its final approval. In between is where it got interesting and “port congestion” came to be reported in main stream media. Management pointed to the intentional shorting of the workforce by union leadership. The union countered saying the terminals brought the problem on themselves by not being prepared for big ships with more cargo. In any event, port congestion was amplified at the largest Pacific gateways.

Export apples were not making it overseas markets in time. Retailers decried the slow flow of their freight from ship to gate and finally to shelves. But first the ship had to get to berth. By February, when the tentative agreement was reached, there were over 30 ships waiting at anchor off Los Angeles and Long Beach. POLA executive director Gene Seroka told the Wall Street Journal that he expected “it will be about three months before we return to a sense of normalcy.”

Over the nine months that the negotiations were underway the cargo interests were active and vocal. A coalition of companies and trade associations formed and periodically met with and issued joint letters to policy makers. They asked for intervention or at least for official Washington to pressure negotiators to make it quick. Their major complaint over time was that President Obama was just, in the White House’s word, “monitoring,” not acting. Members of Congress eventually expressed their concern about the effect of the prolonged talks.

Meanwhile the Port of Portland had its own particular low productivity problem where a continuing multi-year dispute, if anything, wasn’t helped by the prolonged contract talks. By February, a frustrated Hanjin Shipping announced it would end service there, leaving Portland and its ICTSI terminal operator in search of a willing container line.

Leading up to and long after the conclusion of the contract talks the shipper community lobbied for “a tool that will help provide certainty to future negotiations.” Letters seeking legislation to provide that tool typically would carry over one hundred organizations’ names. Some bills eventually were introduced. But from the perspective of most ports, the bill represents more problems than potential solutions.

Congressional advocates for the cargo interests have taken two approaches in their legislation. The first to emerge was the “Port Performance Act” (S.1298) by Senator John Thune (R-SD). He chairs the Commerce, Science & Transportation Committee that eventually approved the measure. Noting that the port sector had yet to be plumbed for the sort of “condition and performance” data that Congress and transportation planners say are needed to better evaluate the national freight system, Thune’s bill prescribes the annual collection of monthly terminal operations data. It’s the sort of data that terminal operators keep for themselves to improve terminal functions and that port authorities are reluctant to have out there to be used by the competition. In the version that ultimately was approved as a provision in the Senate’s surface transportation bill is the requirement for data on vessel, train and truck time in port, lifts per hour, and cargo dwell time. Those and other metrics are required to be used for the annual reports to USDOT.

What is not in the Senate-passed bill is a provision, original to S.1298, that would require monthly reports of port performance data to USDOT and Congress during collective bargaining periods when contracts have expired. Organized labor and ports don’t like the bill and the unions lobbied especially hard to have that particular provision excised.

The other type of bill that was introduced—first in the Senate and more recently in the House—would amend labor law. Whereas Thune’s Port Performance Act is premised in part on the idea that data would be useful in documenting when port cargo operations and cargo interests suffer during contract negotiations, the other legislation is to provide a means to engage the government and the courts in bringing closure to prolonged negotiations i.e., a market for that data.

Freshman Senator Cory Gardner (R-CO) introduced his “Protecting Orderly and Responsible Transit of Shipments (PORTS) Act” (S.1519) to amend the Taft-Hartley Act to make slowdowns an unfair labor practice and empower governors to initiate boards of inquiry and seek court injunctions. (The House version was introduced in July by Dave Reichert (R-WA) and others.)

Senator James Risch (R-ID) takes a somewhat similar approach to the Gardner bill, with added inspiration from the Portland terminal operator who wants parties responsible for slowdowns to be penalized. Risch’s “Preventing Labor Union Slowdowns (PLUS) Act” (S.1360) makes slowdowns an unfair labor practice, defines slowdowns, declares US policy as one to “eliminate the causes and mitigate the effects” of port disruptions, and prescribes penalties for violators including decertification of labor organizations.

So what are the prospects for these bills in this Republican-led Congress? Amendments to labor law are sought by Republicans and opposed by Democrats. While the former has solid majorities in both chambers, the latter is in a position to slow and stop bills in the Senate where 60 votes routinely are needed to assure passage of just about any bill of substance. We may see hearings on the PORTS and PLUS Act legislation, and we definitely will see GAO reports—already requested—on the economic consequences of the West Coast talks. But between the Senate rules and the Democrat in the White House (see Secretary Perez comments), those bills will have trouble becoming law, perhaps even getting floor time in Congress.

Thune’s Port Performance Act is quite another matter. The diluted version of the bill passed the Senate, tucked away in the 1024-page, appropriately labeled DRIVE Act (H.R.22). It is the Senate’s version of a must-pass highway and transit bill. Key House legislators have yet to weigh in on the issue of port performance metrics and data collection, much less produce their own 6-year transportation infrastructure bill. Some action on the larger bill is inevitable, perhaps to the point of becoming law.

When the House side takes up the question, cargo interests will again point to the West Coast experience and seek restoration of frequent data reporting during contract talks. Port interests will explain why the Thune language is generally impractical and unwelcome. Labor will ask the House transportation leaders to flatly oppose the entire Port Performance section that is in the Senate passed bill.

More to come on this matter of the performance and condition of ports, and how and whether to measure it.   Pbea

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A Perspective on Port Dominoes

In Competition, Efficiency, Intermodal, Ports on October 3, 2014 at 12:52 am

A few days ago over 100 people packed a room at high up in Baltimore’s World Trade Center for a day-long forum on “port congestion” convened by the Federal Maritime Commission. It was the second of four planned public meetings–the first was in Los Angeles and the next two will occur in New Orleans and Charleston. The window views from the meeting venues will not be the only differences in what is observed at the four sessions but there are bound to be things in common, too.

The subject of congestion means different things depending on where you are. The severity of the problem also depends on when the post-Panamax ships will arrive in greater numbers to the Gulf and on the East Coast.

The Ports of Los Angeles and Long Beach qualify as Congestion Central if only as a matter of volume and a PierPass system that is working only too well. Some of what they are experiencing could be visited upon the Port of New York/New Jersey in less two years’ time when the Panama Canal gives way to the big ships and if certain problems are not fixed by that time. But that does not mean New York Harbor isn’t experiencing head-throbbing congestion today. Name the problem or snafu and the bistate port has experienced it like punches to the gut. So much so that it did not take much convincing to get terminals, truckers, shippers, labor, carriers and others in the room and agree to hold hands and embark on a waterfront version of a 12-step program.

Norfolk may have 50-feet of water to suit, first, colliers and now big box ships but it also is scrambling to have infrastructure and systems ready in a couple years. Truck and terminal-related problems prompted Norfolk’s own come-to-jesus/how-can-we-fix-this? process. Like other ports the problem is more on land than in the water. The concern isn’t about ships scraping bottom but about terminals getting stuck without a chassis or with too many ships and too little in the way of equipment, labor, trucks or gates. It helps that the Vice President brought a $15 million TIGER grant to Norfolk last week to help pay for improvements to gates and last-mile infrastructure over the next few years.

In the South Atlantic the stories and problems will sound a bit different, as they will in the Gulf. Ports there undoubtedly will paint favorable comparisons to their troubled brethren to the north in a sort of Alfred E. Newman way–“What, me congested?”–and not without reason. But there the trucking and chassis management problems may be only in early stages of development and more of the big ships (and perhaps big-ship-challenges) may be in their future. In fact they are counting on it.

A perspective on the problems facing terminals recently appeared in the Journal of Commerce. The opinion piece by John Crowley, Executive Director of the National Association of Waterfront Employers (NAWE, a client) was cited at the FMC forum by Bill Shea, CEO of Direct ChassisLink (DCLI) in its enumeration of congestion-inducing factors that are in play to one extent or another at U.S. container ports. Crowley pointed to 12 factors including the bunching of ship arrivals, larger ships and cargo discharges, local traffic congestion, terminal capacity and gate hours, truck driver decisions, labor shortages, and even severe weather such as has been seen in the Gulf and more recently from Superstorm Sandy. Most of those were mentioned by speakers at the Baltimore session this week.

Crowley’s piece speaks to the fact that the symptoms of what is being called port congestion are seen throughout much of the intermodal supply chain, which is to say, not just right there at the marine terminal. “The intermodal freight system…consists of market-based industry segments. There are pressures aimed at making each segment more operationally efficient and increasingly productive. It’s a system of nonstop competition, hypersensitive economics and narrow margins. We see it in the increasing size of container ships, the investments made in marine terminal technology and capacity,” etc. “The market determines demands on price and service levels from the modal carriers which, in turn is felt throughout the supply chain and by all modal carriers. Situated in the midst of those demands are marine terminals that strive for each modal operation – marine, rail and truck – to be roughly in sync.”

John Crowley “encourages all industry sectors to collaborate, as much as practicable and permissible under law, to arrive at solutions that will serve their mutual interests… Our operators rely on each mode to similarly commit. Solutions may not come as easily and swiftly as we all would like, but they will have to come about through adaptation in the marketplace by the principal actors in the intermodal freight system…” He calls for government policies that foster market solutions where possible. “We welcome positive and appropriate federal involvement that contributes to solutions but will resist unproductive, regulatory intrusions into terminal operations and where even well-intended government involvement will only frustrate the development of market solutions.” Find the full piece here.

Those views were also heard by the folks in the crowded 21st floor meeting room in Baltimore.  The Port Authority of New York & New Jersey’s Rick Larrabee described one of the guiding principals in the formation of the Port Performance Task Force 10 months ago. The port’s stakeholders had to be willing to “look inside” for answers as much to look to others in the port to fix the problems. Few of those problems stand alone. A line of dominoes is not the perfect metaphor but it will do. The trucker’s dilemma, for example, is one that is felt and affected by other actors in the supply chain. The companies and drivers have something to contribute but without changes in other sectors the drayage problems will become more severe; the congestion will worsen.

Dire predictions underscored the calls for solutions.

Collective efforts formed to tackle problems in the ports of San Pedro Bay, New York Harbor and Hampton Roads and as a result there is reason for optimism. But as several people told the FMC commissioners this week, we will have a rough year or two, starting this winter, until those solutions are implemented by the principal actors in the port marketplace.

Meanwhile, the FMC will hold its forums. The commissioners and staff are taking notes and those will emerge in some form of a report. It is good for the government to be alert to what is going on at the nation’s gateways and the problems of the freight logistics system. That agency may even decide to take some action to the extent its limited jurisdiction allows. But it is up to the chassis, terminal, truck, ship, rail and distribution center operators and the beneficial cargo owners ultimately to figure out how to make things work better.   Pbea