In the second quarter of 2016, trucks were able to pick up and deliver containers at the Ports of Los Angeles and Long Beach CA more quickly than in any other quarter over the past two years. This is according to monthly data reported by marine terminals and compiled by PierPass Inc.
In both May and June, turn times fell below 40 minutes during the Peak shift and below 45 minutes during the OffPeak shift for the first time since the second quarter of 2014. Turn time measures how long it takes a truck to drop off or pick up a container at a marine terminal. Average turn times for the full quarter were 40.8 minutes (Peak) and 43.0 minutes (OffPeak), down from 55.3 minutes (Peak) and 58.4 minutes (OffPeak) during the fourth quarter of 2014.
In order to increase cargo velocity, terminals have invested hundreds of millions of dollars in new automation technology and other infrastructure. They have also implemented new procedures to address challenges presented by the arrival of much larger new ships, the spread of vessel-sharing agreements, and the transition of chassis ownership from shipping lines to leasing companies. Terminals have also increased their coordination with trucking companies to extend the use of free-flow or peel-off procedures for rapid delivery of large groups of containers.
More of the terminals have also moved to adopt appointment systems, to better spread cargo movement over the hours of operation and coordinate which areas of the yard are being worked to enable more efficient use of container-moving equipment. As of July 2016, seven of the 13 terminals are using appointment systems, with more expected to come online by the end of 2016.
During the second quarter of 2016, more than 850,000 containers were picked up or delivered on weeknights or Saturdays during the OffPeak shifts established by PierPass. Without OffPeak, those truck trips would take place during weekday daytime traffic, greatly increasing congestion on the roads and highways of nearby communities.
PierPass launched the OffPeak program in 2005 to reduce severe cargo-related congestion on local streets and highways around the Los Angeles and Long Beach ports. Using a congestion pricing model, PierPass charges a Traffic Mitigation Fee on weekday daytime cargo moves to incentivize cargo owners to use the OffPeak shifts. The TMF also helps pay for the labor and other costs of operating OffPeak shifts.
Since 2005, OffPeak has taken more than 35 million truck trips out of daytime Southern California traffic and diverted them to less congested nights and weekends.
In related news, the West Coast MTO Agreement (WCMTOA) has announced a 1.9% increase in the TMF at the Ports of Los Angeles and Long Beach, scheduled to take effect August 8, 2016. The increase will sustain continued operation of PierPass OffPeak gates amid labor cost increases.
Beginning August 8, the TMF will be increased to $70.49 per TEU (20-foot equivalent unit) or $140.98 per 40-ft container.
The Journal of Commerce website has published an article by Bill Mongelluzzo, senior editor, on the Federal Maritime Commission chairman’s response to the fee increase:
Following shipper complaints about a lack of transparency when marine terminal operators in Los Angeles-Long Beach announced on the weekend that the PierPass traffic mitigation fee will increase by 1.9%, Federal Maritime Commission Chairman Mario Cordero said the commission is responding.
“The FMC is concerned because of the concerns expressed by the stakeholders,” Cordero said. “We will look into the basis of the increase,” he said in reference to the fee that supports night and weekend gates at the largest US port complex.
Of equal concern to the FMC, though, is the hesitancy of other ports, especially those on the East and Gulf coasts, to seriously examine programs of extended gate hours to handle the cargo surges and container moves per vessel call that are now being generated by the larger ships that are transiting the enlarged Panama Canal.
“You can have the most automated, state-of-the-art terminal, but if it only goes to the gate, it’s not serving the trade,” Cordero said.
According to an analysis by maritime industry consultants SC Analytics, the costs incurred by the terminals to operate the OffPeak shifts in 2015 totaled $236.2 million. During the year, the terminals received $168.9 million from the TMF, offsetting only part of the OffPeak program’s costs.
For more information, see www.pierpass.org.
