The Ports of Los Angeles and Long Beach, having delayed a program for extended gate hours by four months, plan to launch a more aggressive version upon implementation, now set for next March.
The port complex’s 13 terminals are slated to be open for five off-peak shifts each week instead of the single shift originally conceived. Initial plans called for gates to open for a Saturday day shift during the first month, with the addition of a nighttime weekday shift in each of the next four months.
Vessel and terminal operators opted to begin the so-called PierPass program at full steam to create more scheduling flexibility for truckers, warehouse operators, longshoremen and brokers who move the cargo in and out of the ports as well as to be ready for next spring’s peak shipping season.
Truckers, in particular, are expected to benefit because PierPass will create more opportunities for work without violating federal workday limits requiring an eight-hour break between shifts.
The cost to implement PierPass is expected to exceed $158 million in the first year, which doesn’t please vessel lines and terminal operators who will have to pass those costs onto their customers. But this year’s record cargo volumes and massive ship congestion at and off the ports underscore the fact that the maritime industry can no longer operate with a business-as-usual mentality.
“It’s a necessary evil,” said Allen Clifford, senior vice president of Mediterranean Shipping Co., which calls on the Long Beach port. “The longer you stay open, there are additional costs. But that’s easily averted by the benefits to your customers.”
As an incentive to get importers to use the program, PierPass calls for an additional $40 charge on every 40-foot-long container moved during weekday hours. There are no additional charges for off-peak port use, and for each container a shipping company moves off-peak it is reimbursed the charges for weekday movements.
Officials of the PierPass program, established by terminal operators, expect that the program would entice importers and exporters to move a combined 25 percent to 30 percent of their goods during off-peak hours.
More efficient process
“The stakeholders involved all seem to feel we would gain more efficiencies by having all five gates sooner rather than later,” said Bruce Wargo, general manager of the program. “A warehouse operator, for example, wants to tell his people to come back for a night shift all week long rather than one night a week.”
Not all cargo owners will use the program. Smaller importers don’t have warehouse operations open at night or on weekends and brokers working for retailers that demand same-day delivery as shelves are emptying will not want to wait for a night or weekend shift.
As a result, Wargo acknowledged fees for daytime moves would likely increase to make up for the revenue shortage he believes will be revealed when the program receives its first audit three months after it begins.
“The intent is to get started and then review the participation by the stakeholders and make adjustments,” he said. “It could be more, it could be less, but it’s probably going to be more.”
The ports are headed toward record years in cargo volume. Through October, Long Beach moved 4.6 million TEUs (20-foot equivalent units), a 21.4 percent increase over the first 10 months of 2003, while L.A. handled 6.1 million TEUs, a 2.5 percent increase over the year-earlier period.
But congestion at the ports forced 119 vessels to divert to other ports from July through Nov. 22, and Los Angeles and Long Beach continue to experience the worst backlog of ships waiting to unload since the 10-day lockout of unionized longshoremen in 2002.
Cargo that normally took two or three days to unload took a week or more as ships were forced to idle for days off the docks.
Only in the past week have maritime officials seen signs of the crunch easing, as the number of vessels waiting on or off the docks dropped to less than 60, well off the peak of 94 ships in early October.
Smoother cargo flow is expected to be short-lived, as a double-digit annual increase of imports coming into West Coast ports may be compounded by the lifting of quotas for garment imports at the end of the year, putting additional burdens on the local ports in 2005.
Congestion relief was largely attributed to the placement of more than 3,000 casual longshoremen (of the 5,000 hired since August) into the workforce.
An additional 1,000 casuals during that time were registered with the International Longshore and Warehouse Union, qualifying them to handle the more skilled tasks.
The peak-shipping season is coming to a close. However, the ports can only expect a short breather until early next year before cargo traffic begins to spike again.
Maritime officials believe next year’s peak shipping season will begin in May (as it did this year), which is three months earlier than usual.
“We’re going to be faced with increased business,” said Guy Fox, executive vice president of customs services for Carson-based Stonepath Logistics Inc. “You’ve got to really formulate your plans for peak season next year. We should be like the Boy Scouts and their motto: Be prepared.”
Not willing to chance a repeat of this year’s problems, the U.S. Department of Transportation announced last week it would open an office in Long Beach to better assess the challenges facing the ports and their customers.
