Pacific Rim Port Congestion is a Consequence of Complex Issues

When operations were suspended indefinitely last month at China’s Meishan terminal in the Port of Ningbo-Zhoushan, industry analysts were quick to detect a complex dysfunctional trend.

The event triggering this port’s closure was due to another outbreak of COVID-19. But all major Pacific Rim ports are vulnerable to a host of similar disruptive events.

“We are at a critical moment in time as the continuation of port and terminal closures is further weakening an already fragile global supply chain.” Says Brian Alster, General Manager, Third-Party Risk & Compliance, Dun & Bradstreet. “The immediacy of the moment often takes away from the importance of planning for the future.”

One need only look to this nation’s two largest ocean cargo gateways to see the need for more strategic cooperation.

Container dwell time at San Pedro Bay ports of Los Angeles and Long Beach, for example, remains a crisis as pandemic-related surge volumes remain high…with no end in sight.

“The more containers that are at the terminals, the more unnecessary moves dockworkers must perform to deliver the intended outbound box. It also limits the flexibility to handle more containers and unload more vessels,” observes Jessica Alvarenga, Manager of Government Affairs for the Pacific Merchant Shipping Association.

According to maritime economist John Martin, Ph.D., the broad scope and “systemic nature” of port congestion must be addressed by all logistics management players.

“We found that much of the congestion originates far from the docks,” he says. “Warehouses are filled, causing back-ups all the way to port terminals, made worse by shortages of shipping containers, rail cars, trucks, and chassis to meet the enormous demand. These dynamics have driven delays, shortages, and increased prices at retailers nationwide.”

Following a dramatic drop in import cargo volumes early in the COVID-19 pandemic, volumes saw an unprecedented increase beginning in April 2020, the research shows, peaking last October and again in March 2021. Over that year, the Ports of L.A. and Long Beach experienced extreme cargo swings, falling to under 1 million twenty-equivalent units (TEUs) in March 2020, then nearly doubling to 1.8 million TEUs a year later in March 2021. The import surge continues to break records.

Congestion triggered by this influx has corresponded with diminished rail capacity, longer truck turn times, and increased dwell times for containers and truck chassis. Terminal dwell times – which measure how long containers remain at terminals – peaked in January at over five days, more than twice the standard length.

Meanwhile, street dwell times for chassis have also hit crisis levels, exceeding the industry “red zone” of six days continually since November 2020. In fact, early December 2020 and January 2021 showed peak street dwell times for chassis at nine days – a full week above the optimal level of one to three days.

“Our findings indicate that the breakdown in off-terminal logistics, rather than a lack of longshore workers at terminals, has fueled the terminal and vessel congestion,” maintains Martin.

And it’s wrong to blame dockside labor, Martin adds. Despite historically-high hours put in by the International Longshore and Warehouse Union, production per hour dwindled due to terminal congestion.

“With nowhere to locate additional containers, ships at the San Pedro Bay Port Complex declined or canceled labor more than 1,000 times between last October and this March, with more than 40% of container vessels at berth during peak days last November canceling or declining labor gangs,” Martin observes.

Martin’s research was commissioned by the Pacific Maritime Association, which concludes “stakeholders must work collaboratively across industries to identify solutions that span the entire global supply chain.”

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