Is it time for carriers to consider targeting a single port call on the West Coast?
The Asia-US trade is hotter than hot. This has led to record vessel congestion in the Los Angeles / Long Beach port area while carriers have suspended calls in Oakland, CA over increasing vessel congestion. Furthermore, a few carriers are going to add extra loaders and two China-based vessel operators are going to initiate their first ever sailings to the USA.
It is not evident that the problem at hand is a shortage of vessels. Maersk continues to report that terminal congestion is causing a 20% reduction in capacity. It is the port congestion that needs to be addressed first.
The carriers are clearly struggling. It might be best for them to consider targeting a single port call on the West Coast to gain efficiency by reducing the number of days sitting at anchor. Does it make sense to wait at anchor for 7 – 10 days in Long Beach after rejecting Long Beach cargo at origin that could have filled the vessel? Instead the carriers are opting to also carry Oakland destined cargo which requires an additional 7 – 10 days at anchor outside of Oakland waiting for terminal access.
What if carriers replaced the Oakland cargo with the Long Beach cargo they had rejected and made a single port of call at Long Beach? They could then use a separate vessel to carry the Oakland cargo directly to the Port of Oakland. This would eliminate the wait time in Oakland and speed the initial vessel’s return to Asia by 7 to 10 days.
The advent of containerization was driven by bulk vessels getting too big. Dwell time of the large bulk vessels became the achilles heel and a shipping industry adage was coined – you only make money in shipping when the vessel is moving; not when the ship is idle. So, is big always better? Maybe not if multiple ports of discharge are required.
Think of the passenger airline business where Southwest and Alaska Airlines upended the big airlines when they brought in smaller aircraft. Has the time come and gone for ever-larger vessels requiring multiple discharge ports in order to sail full vs. smaller vessels spending less time in the origin and destination terminals? This concept would allow more rapid turns to origin to fill the vessel again.
We have read about the backlog created in the Shenzhen and Guangzhou port terminals where the Yantian International Container Terminals makes up a large part of the port complex. A recent Journal of Commerce article quoted, “John Painter, CEO and founder of Guangzhou Port America, [who] said orders from South China were being delayed because of a lack of capacity at factories, lack of raw materials, lack of equipment, and lack of space — but there was no lack of demand.”
“Every order or booking now has urgency attached to it,” he told JOC.com Wednesday. “The lead times continue to extend, and shippers are now challenged to tap their networks to seek relief and solutions while being creative and agile.”
Meanwhile, back in the U.S., there is a labor shortage in Oakland and a railcar shortage in Seattle-Tacoma. This has caused vessel congestion in those ports as they struggle to handle surging cargo volumes.
Is it time for carriers to consider targeting a single port call on the West Coast?
