If NY-NJ Port Congestion Persists: How Much Did Carrier Alliances Really Contribute?

Depending on how much you expected port congestion on the east coast to ease with the ratification of a five-year agreement between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) on the west coast, you might be disappointed. West-to-east rerouting of freight became common due to the uncertain labor situation, which resulted in slowdowns at major ports across the country. However, rerouting of large tons of freight was just one of the reasons for the east coast congestion. An increase in the number and size of carrier alliances is also facing greater scrutiny as to its contribution to the congestion problem. Trucking firms, logistics companies and owner/operators just want the congestion to end and to keep their freight moving. A recent article in JOC takes a closer look at the challenges facing the east coast ports.

Extraordinarily long queues for drayage drivers result from the docking of large capacity ships and heavy container volume at Port Newark Container Terminal (PNCT) and the Port Authority of New York-New Jersey (PANYNJ), trucking organization officials are calling a foul on the shipping alliances.

There are currently four major shipping alliances in question that control the bulk of container freight transportation between the U.S., Asia, and Europe. These are:

2M – Maersk Line, MSC;
CCU – CMA CGM, China Shipping UASC;
CKYHE – Coscon, “K” Line, Yang Ming, Hanjin, Evergreen; and
G6 – APL, Hapag-Lloyd, Hyundai, MOL, NYK, OOCL

Jeff Bader, President of the Association of Bi-State Motor Carriers and of the drayage company Golden Carriers, puts a significant portion of blame on the Alliances, particularly the 2M Alliance, for east coast port congestion. Rick Larrabee, Director of Port Commerce at the Port Authority of New York and New Jersey, spoke specifically of larger ship capacity as being the major contributing factor.

Freight haulers are generally aligned, stating that the resulting high container volume and overloaded conditions at terminals, has led to increased trips for empty container drop-offs at off-dock depots and longer queues. You won’t find a comrade in the trucking industry (long haul or drayage) that isn’t suffering from lost revenues because of this situation.

As recently reported in a JOC article, PANYNJ and the New York Shipping Association are currently looking to implement plans for improved chassis availability. The idea is to create a centrally managed grey pool of intermodal chassis that could be interchanged among leasing companies. The news isn’t going over well as port and U.S. Federal Maritime Commission (FMC) officials as well as drivers are saying that it won’t be enough to keep up with the projected demand.

The congestion and outcries from officials has led to increased scrutiny of the shipping alliances by the FMC as ranking commissioners call for more info on how these alliances plan to reduce port congestion. This was made clear in a later JOC article where some FMC commissioners along with the Global Shippers Forum want benchmarking and performance indicators to be put into place in order to show that these carriers aren’t abusing their position. Specifically, they cited decreased service and transference of cost issues to the benefit of Alliance members and the detriment of overloaded port terminals and freight transporters as illustrative of the need for additional monitoring.

All of these voices have prompted the FMC to discuss the problem in a closed-door meeting that reportedly took place in Washington on April 13th according to a World Maritime News article.

Another article from logistics and supply chain magazine DC Velocity stated that the Port of Long Beach’s Chief Executive Jon Slangerup has taken a similar position.

Slangerup states that he sees that the volume of cargo arriving on increasingly larger container ships has outstripped shoreside infrastructure and handling capacity on the west coast. He believes that the problem of disorganized onboard container storage from multiple alliance ships is causing chaos when there is a need to identify and retrieve a specific containers. The result is additional delays.

While larger ships and additional cost cutting measures result from the Alliances is a large contributing factor, the congestion problem has other causes. In fact, the Alliances are likely to be highlighting and / or worsening problems that already existed though perhaps not to the same degrees. Among them is the growing problem of chassis availability due to an insufficient supply of the appropriate type of chassis.

The chassis shortage results in part from container storage and logistics issues within and outside of the port terminals. The problem is only exacerbated by the continual chassis fleet maintenance and repair needs, which can affect more than 20 percent of the fleet at any one time.

Additional regulation to promote shipping alliances to be more accountable and transparent won’t solve the problem. Additional data and target performance metrics may reveal specific areas where ports, regulating entities, trucking interests and the alliances can work together to implement new approaches to alleviate the root causes of port congestion and enable freight transporters to cost-effectively keep up with demand.

April Uhlenburg
April U

April has been working with Penn Intermodal’s Sales and Operations teams to educate clients on the benefits of leasing chassis for bulk liquid storage and transport since 2012.