Furthermore, Bethann Rooney, Deputy Director of the Port of New York & New Jersey, highlights that even though the Port of N.Y. and New Jersey has had a cargo increase of 23% at their terminals, they’ve had the capacity to manage this. “The terminal operators have been focused on health and safety while keeping terminals operational with extra hours of operation on Saturdays,” and even expanding operations into night-time hours.
Rooney says the uptick of “extra hours has been minimal because there’s no room in warehouses, as containers are stuck in the marine terminals for two to three times more than usual. Average dwell time was 3-4 days, increasing on average to 8-12 days. Still, there have been containers that have been around for 30+ days, making the terminal an extension of the warehouse.” Due to the fees charged to keep the containers in the terminal, “some shippers have moved the containers from the terminal, but they still stay on the chassis.”
Some of the inputs Rooney highlighted have led to this success. “We had the capacity in the port as a result of billions in investments by the port authority and terminals. We have the forum on the council of port operators, which brings together executives of the industry across the entire supply chain. When they come to the table, they represent a sector – and not their employer – like warehousing [or] trucking, and everybody works together to come up with a solution for the good of the whole.” When experiencing congestion “the council – in order to ensure that the port would be resilient to any type of disruption in the future – provided the platform for coordination, collaboration, communication and transparency.” Earlier in 2020, the council used to meet on a quarterly basis. However, given the changing scenario, they decided to start meeting weekly.
According to Rooney, “communication, teamwork and transparency have been key to being able to handle this extra volume.” East Coast ports have experienced labor shortages, chassis issues, hurricanes, and equipment shortages, whereas the West Coast ports were going through lockout issues. On the chassis problem, Rooney adds, “We never implemented a chassis pool. We collectively decided we would remove them and centralize them in jointly operated yards, with assets remaining.” The recommendation led them to spending two years trying to implement it, during which they decided on a completely new structure which is now “touted as the model to follow.”
Despite the surge in volume in other ports (such as the Port of Stockton), many brands are facing ongoing challenges with seemingly no quick fixes. Scott Moorad, COO – North America at Hillebrand Bev Pros, says, “One of the things we haven’t talked about is the fact that the size of the cargo ships has grown immensely over the last 20 years. That drives better efficiency, but not all the terminals and ports are designed to handle them. There’s huge investment that has to happen, and there are not a lot of overnight successes.” For Hillebrand, “the core is still in the major ports, and they are constantly looking at alternatives, where there may be scope for offloading.”
Similarly, Eugene Petrovsky, Director, Supply Chain from WineSellers, Ltd., mentions trials with alternative ports have backfired. “We tried an alternate route and shipped to Port of Houston. Then we were going to rail the containers up to Oakland. However, that has backfired on us.” As their containers started arriving in Houston, there were “some issues with the weather, and then there was a brief period of time where Houston’s port networks went down.” This compounded the “main issue of this routing causing the rail systems to become overwhelmed.” Another reason for the failure of “the Houston experiments,” in Petrovsky’s words, was that “there was a shortage of truckers. Of course, there’s a shortage of chassis. Even when the containers were offloaded in Houston and even if they could get on rail, there was nobody to bring them onto the rail.” These shortages seem agnostic to any particular port.
Brian Kempisty from Port X says an alternate approach for the shipping industry is that “there’s one other item that no retailers really want to hear, and I’ve been encouraging people to palletize their cargo overseas. Many of these containers in vessels coming in now must be transloaded. So, we pick them up from the port, we bring them back to our warehouse, we translate them to over-the-road trucks and then maybe deliver them to Chicago or Atlanta or Dallas. It takes nine man-hours to translate 1000 cartons on the floor into a trailer. This means three guys for three hours, and you’re tying up the container in one dock for three hours in the trailer and another dock for three hours. If you palletize your cargo overseas, you have one man on a forklift, and it’s 45 minutes versus the nine man-hours that it took. Most retailers and importers do not want to hear that because they lose a little bit of capacity in the container from overseas. But, with our U.S. infrastructure for drayage, transloading and trucking at gridlock now, if you can get better velocity through the supply chain – better use of drivers and warehouses – we could get this thing cleaned up in a quarter of the time make it way faster.”
If you can do four times as many transloads in a day, you’re getting four times as much cargo out of the port and on the road to Distribution Centers for final consumption. “It’s that velocity and more efficient use of our equipment and drivers we need to strive for, especially with labor as an issue.”
Likewise, 90% of the drayage drivers in L.A/Long Beach are owner-operators, and owner-operators do not get paid by the hour. They get paid by the move. Hence, drivers are getting very frustrated when their efficiency goes down. Because if you could do more moves in a day, you would get paid more. “This velocity is very important for the drivers as well to make money and stay in the business,” said Kempisty.
Furthermore, Kempisty added, “it would be way easier and more cost-effective to pay somebody in China or Vietnam to put the cargo on pallets than somebody in the United States. From a labor cost perspective, it would be way cheaper for these retailers in the long run. This cargo is almost always palletized at some point through the supply chain, so why not just get it done overseas?”
A simple but useful exercise prescribed by Sanjeev Sahani, VP of Operations at Wayfair, is to think about the journey. “People don’t necessarily always think through the journey a container takes from the time it gets off a ship to the time it makes it to a warehouse. Then, actually working through the choke points, interestingly, you will find that it’s not a common issue in every single port. There are some ports which are phenomenal at managing unload times from the vessels. There are ports which are great in creating stacks for the end consumer, and for the retailer bringing those in.” But the “interfaces with the truckers or the interfaces with the customs logistics agencies may be an issue for them. And for the others, it may be the exact opposite.. Generalizing ports disruption – strife and backlogs – sometimes takes you away from the real problem at hand, which actually is fairly more complicated than it seems.”
For Sahani, “the investment needs to go in the steps that will improve our productivity and efficiency of ports. That is where we need to prioritize investments and work that needs to be done.” Wayfair continues to make end-to-end technology and analytics investments to predict when they think their containers and their goods become available and how they use that information to satisfy the end customer truly. Not unsurprisingly for a tech firm, the kinds of investments Wayfair is making are typically in data science and models, which focus on historical data and trends of the performance of certain shipping lines, ports, clearance timelines and trucking companies. This data is then input into various data science models to derive what should be the prediction for clearing every single one of the items from any particular vessel.
Another major factor, according to Sahani, “is collaboration in the supply chain, but it comes down to this: are we sharing data with each other? Prioritization of where data sharing happens is the first element to solve. Typically, data sharing is actually less valuable than what really makes the difference.” What they have learned in their initial collaboration efforts was that “what really matters is your choke points, and how you use the data within the choke points and the parties that are involved.”
Technology, as an investment and an enabler, has come to the rescue of quite a few shippers. As Scott Moorad stresses, “the investment that we are doing, and the demand of our customers is to generate greater visibility. Real-time visibility is much more necessary because you’re really trying to manage your inventory and your demand planning”. For him, “when everything was just flowing and working more smoothly, yes, you wanted visibility, but you could just assume where it was. Now you need to know because you can’t trust where it’s at.”