Shifts in Ocean-Going Commerce Upend Cargo Trade at US Ports

LOS ANGELES (Los Angeles Times/TNS) -

With 30 ships still stranded off the California coast, the Los Angeles port and its neighbor in Long Beach have only begun to clear a cargo backlog in the wake of the recent labor dispute.

But the fight between shipping companies and the dockworkers union, resolved last month, was only one of the causes of chronic congestion at the nation’s busiest seaport complex.

Sweeping changes in the global shipping industry have upended cargo trade at major U.S. ports. To cut costs, shippers have formed alliances to combine goods from multiple carriers on so-called megaships, some with nearly twice the capacity of traditional commercial vessels. That means each ship takes that much longer to unload.

At the same time, the shipping companies outsourced the management of truck trailers that carry shipping containers around the country. That transition did not go smoothly, by all accounts, creating a logistical nightmare that snarled traffic at Southern California ports long before labor talks broke down.

“In essence, the maritime supply chain has become unhinged,” said Jock O’Connell, an international trade economist with Beacon Economics. “You’ve got some fundamental problems that will take a long time to resolve.”

The shifts in oceangoing commerce have led to significant challenges for those handling the goods on shore.

Traditionally, each shipping line had its own terminal at the port and provided its own trailers, allowing containers to be trucked away to warehouses and distribution centers. That gave shipping companies control over much of the supply chain, from the loading of goods in China to distribution via the U.S. highway system.

The arrival of much larger ships, carrying goods from several ocean carriers, means that cargo once confined to a specific terminal can end up anywhere at the port. In addition, shipping companies in recent years decided to sell off the truck trailers they had traditionally provided at U.S. ports.

The trailers, called chassis at the ports, are a crucial link in global transport. By outsourcing to third-party equipment companies, shipping lines inserted a new set of players into the mix.

The changes meant truckers had to ensure they were using the correct trailers to haul away the goods. With cargo increasingly spread out across terminals — a side-effect of the megaships — the trailers often weren’t where they needed to be.

That sent truckers on hours-long expeditions searching for the right chassis.

Shortages at one terminal meant truckers had to rush to another one, waiting in long lines with no certainty that the equipment would be there. Tempers flared, and truckers frequently squabbled over scarce equipment.

Many port truck drivers are paid by the number of loads they deliver, not the hours they work, so delays cost them money. And some delays exceeded four hours, said Julio Garcia, who has driven at the ports for more than five years.

“There’s so much pressure you have to get the load out,” he said. “Nobody wants to waste a second.”

The chassis delays weren’t confined to Los Angeles and Long Beach. The port of New York and New Jersey — the nation’s third-largest complex — has also struggled with the equipment changeover.

This month, three of the nation’s largest chassis owners launched a plan to reduce backlogs. Rather than forcing trucking companies to use one company’s trailer tied to a specific contract, the new plan treats all equipment the same.

The three largest operators will now share the equipment in a pool that spans almost all terminals at the two ports. The firms will use an accounting system to tally which trailers are used, and will then settle up at the end of the month, Lovetro said.

“The key is that the units can be used by anybody,” he said.