WSJ article Relevant to Ga-wide
transportation improvement needs and funding Apr 30, 2015 12:03 PM
A worthy read. Nice backdrop for discussions here in Ga
about transportation infrastructure and especially that component concerning moving
materiel to/from the Savannah port throughout the state. Clearly, transportation
infrastructure writ large is a requirement that must ultimately be addressed with money. BUT, the
major disappointment for me is that the discussion of sourcing that money never
seems to include how existing monies can be more
effectively used, by for example, eliminating FWA,
downsizing existing government, etc.
Rather the default starting point seems to be the zero-sum game of moving money
within existing budgets and/or raising taxes, either
overtly or by stealth. And, that's what I strongly object
to. I would just like our public
officials to be above board with us.-J. Robin.
U.S. Ports See Costly Delays as Cargo Ships, Volumes Grow Problem shows how global trade logistics
are falling out of sync
Severe congestion at Norfolk International Terminal in
Norfolk, Va., and other ports around the
country has made it difficult for the U.S. to keep up with growing shipping capacity.
By ARIAN CAMPO-FLORES and CAMERON MCWHIRTER
April 29, 2015 4:41
p.m. ET
(http://www.wsj.com/articles/u-s-ports-see-costly-delays-as-cargo-ships-volumes-grow 1430340113?cb=logged0.4946234447415918#livefyre-comment)
PORTSMOUTH, Va.—The Port of Virginia, one of the nation’s
largest, was built to handle high
volumes of cargo traffic entering and exiting the U.S. But on his way
recently to pick up a load of bedding, Albert Newcomb was stalled for two hours
before his rig could make it through a mile-long line to one of the port’s
terminals. Once inside, the 43-year-old independent truck driver hit a traffic
jam 13 lanes wide and 10 trucks deep. By
the time he left with his load, he had waited for a total of eight hours. “It’s
ridiculous,” he said, as he sat in his truck idling outside the gates. “It’s
almost to the point where you want to quit.”
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A key reason for the holdup: a surge of containers from
three large ships at dock was straining the port’s capacity and tying up
dockworkers and cranes. Such congestion is becoming increasingly common at
major U.S. ports—a
problem that could have profound implications for the $900
billion worth of goods transported to
and from the U.S. each year by container ships. The slow movement of imports
and exports illustrates how the logistics of global trade have fallen terribly
out of sync. Ocean carriers are deploying
progressively bigger vessels. Some would be taller than the
Empire State Building if stood on end. They can carry more than twice as much
cargo as their predecessors, and are more fuel-efficient than smaller vessels.
To ensure they travel as full as possible, shipping lines have formed alliances
to combine their loads.
But the floating behemoths are overwhelming many U.S. ports
that weren’t built to handle such supersize ships. Of the 10 busiest U.S. ports
by container volume, as calculated by the American Association of Port
Authorities, at least seven are grappling regularly with congestion.
In Newark, N.J., a shortage of chassis—the undercarriages
used to haul containers off the port by truck—is contributing to miles-long
lines. In Los
Angeles and Long Beach, the arrival of giant vessels and the
growth of shipping alliances has caused terminal gridlock for months, leaving
ships stuck offshore waiting to unload. That situation was exacerbated by a
labor dispute at West Coast ports that was resolved in February.
The big ships “have stressed the infrastructure to the
breaking point,” says Jock O’Connell, an international trade adviser at Beacon
Economics LLC
in Sacramento, Calif.
There needs to be “a concerted effort to rethink and redesign the ports to
accommodate these larger vessels and the additional cargo they’re generating,”
he says. It is only likely to get worse. Container volume at U.S. ports has increased
steadily since the recession, hitting all-time highs in 2014 at many
East Coast terminals. Between 2010 and 2040, the volume of
the U.S.’s container trade with
Northeast Asia—which accounts for the majority of the U.S.’s overall
container trade—is projected to more
than triple, according to a
2013 Department of Transportation study.
West Coast ports already receive megaships bearing as many
as 14,000 containers traveling from Asia
across the Pacific Ocean, while East Coast ones are receiving 10,000-container vessels from Asia
through the Suez Canal.
That volume will only grow when expansion of the Panama
Canal is completed next year. The widened, deeper canal will allow ships
carrying as many as 13,000 containers to travel en route to the East Coast,
compared with ships
hauling 5,000 containers today.
The cost of port congestion to retailers, meanwhile, is
expected to climb—and ultimately be passed along to consumers.
Frank Layo, retail strategist at consulting firm Kurt
Salmon, forecasts that the cumulative costs of shipping delays could reach $7
billion this year and climb as high as
$37 billion in 2016. He expects some retailers to divert shipments from Asia to
more-expensive routes to avoid congested West
Coast ports.
Consumers could “feel it in the form of mass out-of-stocks and price
increases,” Mr. Layo says.
Lower fuel costs could help offset congestion costs, but
whether carriers will pass along such reductions to customers is unclear,
analysts say.
Audax Transportation hauls goods ranging from car engines
for Ford Motor Co. to frozen chicken parts for Perdue Farms. Bottlenecks at the
Port of Virginia have reduced the amount
of goods its truck drivers can move in a day by 50% in the past year, says Ed O’Callaghan, the firm’s president and
an
agent of trucking company
Century Express in Norfolk, Va. To make up for lost revenue, his company
has raised prices for customers by about 35%. “It is not enjoyable to approach shippers who
have supported you over the years with
such increases,” Mr. O’Callaghan says. Because congestion has
limited the number of containers the company can move, Mr.
O’Callaghan has had to drop some 20
clients in the past year, including a tobacco exporter and
furniture importers.
Port congestion has also made it difficult for home-goods
importer Hooker Furniture to gauge the staff it needs to handle the dressers,
dining tables and sofas it imports from Asia, says logistics coordinator
Kimberly Clark.
“One day, we could be planning for 15 containers, and we may
only get six” because of shipping delays, she says. Another day, a flood of
containers could arrive, forcing the Martinsville, Va., company to pay workers
overtime or bring in temps.
The backups have “put a lot of pressure on everybody,” says
Port of Virginia spokesman Joe Harris. “We definitely regret” such situations,
he adds. To alleviate congestion, the port in recent weeks has extended
operating hours and added chassis and container-handling equipment. The problem
didn’t happen overnight. Investment by federal, state and
local governments in U.S. ports and surrounding
infrastructure—such as roads and rail
lines—mostly dried up during the recession.
And declining cargo volumes squeezed ports’ finances,
limiting their ability to make significant investments in bigger cranes and other improvements, says
John Martin, a maritime economist at Martin
Associates in Lancaster, Pa.
Around the time the
economy began to recover, shipping lines started deploying more megaships to U.S. ports—years earlier than
most port officials anticipated, Mr.
Martin says. Yet government funding has been slow to return
amid budget
constraints. The result was a “perfect storm,” says Mr. Martin, as
surging cargo volumes slam ports ill-prepared to handle them. Now, ports are
scrambling to catch up. They lag some foreign counterparts, which rely on
unmanned cargo-handling machines to efficiently move, stack and retrieve containers,
Mr. Martin says. Journal of Commerce data on port productivity in the first
half of 2014
showed that the
world’s most efficient port was Jebel Ali in the United Arab Emirates.
It managed to perform an average of 138 container moves—loading, unloading or repositioning—per
ship per hour.
The Port of Los Angeles—the U.S.’s most efficient port at
the time—had only 80 container moves per ship. One difference between the two:
Jebel Ali has invested heavily in
automation and technology to
serve megaships, including $850 million in a new container terminal
unveiled last year.
The White House has provided special infrastructure grants
worth $479 million for 38 port-related projects in recent years. President
Barack Obama has visited Miami, Wilmington, Del., and other cities to promote
more
investment in the nation’s
ports. The Federal Maritime Commission has made resolving port
congestion one of the agency’s top priorities. But it lacks budgetary
authority, which rests with Congress. In the U.S., a “long-term lack of
investment and lack of focus” has inhibited modernization, says Curtis Foltz,
executive director of the Georgia
Ports Authority. “We are woefully positioned to deal with
continued growth in the 21st century.”
Some ports have modernized. The Georgia Ports Authority,
which owns and operates the Port of Savannah, is spending about $1.5 billion
over the next decade to improve crane operations, storage facilities and other
port infrastructure. The state of Georgia is spending another $120 million on
road improvements near the port, to be completed in 2016. As a result, shippers
say the port, the second-busiest by container volume on the East Coast last
year, operates smoothly for the most part, regularly handling big vessels
stacked with cargo for companies such as IKEA and _Target_ (http://quotes.wsj.com/TGT) Corp.
(http://quotes.wsj.com/TGT)
Unlike port authorities in cities such as Los Angeles and
New York that are landlords and lease their multiple terminals to private
companies, the Georgia Ports Authority owns and operates the sole terminal at
the Savannah
port. That gives it control over capital expenditures and
growth plans. To prepare for larger ships, the Savannah port says it started
investing a decade ago in upgrades. Recent improvements include the tallest
available cranes and a state-of-the-art computer system that tracks in real
time the
location of containers, speeding their retrieval for trucks.
In 2007, it helped launch the South Atlantic Chassis Pool, a collection of
about 50,000 chassis shared by various Southeastern ports and rail lines.
Savannah is now
building out undeveloped property inland to store empty
containers, freeing up more space for cargo near the dock.
Others are following Savannah’s lead. Chassis companies are
trying to relieve congestion in New York and Los Angeles by creating pools
similar to the one used in Savannah, says Keith Lovetro, president of
chassis-leasing
company TRAC Intermodal. The challenges in the U.S. are on
display at the Port of Virginia, which has two main container terminals, in
Portsmouth and Norfolk, bustling with
activity as towering
cranes unload ships and enormous vehicles pile containers in stacks. Infrastructure investment at the port
suffered during the recession as well as a
two-year period of uncertainty, ending in 2013, when the state
weighed privatizing it. But the bigger
ships began arriving in 2011—years earlier than expected, says Mr. Harris, the
spokesman. Rising container volume along with backups caused by a spate of
winter storms pushed the Portsmouth
terminal, called Virginia International Gateway, beyond capacity for weeks in March, Mr. Harris says. Crews
repeatedly worked late into the night to clear backlogs, only to have them
“gobbled up by a single ship,” he adds.
Nearby Norfolk
International Terminal, also part of the Port of Virginia, is dealing with
congestion problems as well, compounded by much older equipment prone to breakdowns.
One yard at the terminal is packed with straddle carriers—large vehicles used
to move containers undergoing maintenance. “If you had more of those strads
working, you would have lower turn times” for trucks, says Bill Jackson, chairman
of RJR Elite Trucking in Norfolk.
The terminal also gets so crammed with containers that
dockworkers need to move them around frequently to retrieve the right ones,
leading some to be misplaced, he says. “We’ve had drivers sitting in line five
to six hours
waiting for them to
find the container they want,” Mr. Jackson says. Every month, he says,
he loses several drivers fed up with the congestion—a common occurrence at
ports across the country. Many truckers are independent operators, meaning they
only make money when they complete a delivery. These days, they’re lucky to
make two hauls a day, compared with four or five several years ago. The resulting
shortage is contributing to increased freight costs.
John Reinhart, chief executive of the Virginia Port
Authority, which operates the Port of Virginia terminals, says truckers’ complaints are justified. But “we
have limited resources,” says Mr.
Reinhart, who took the helm last year amid pressure from the state to
make the port profitable.
He says upgrades, including a new computer-operating system
and additional cargo-handling vehicles, have improved productivity. And a
coming GPS-like system to track individual containers will make retrieving them
easier.
To tackle congestion issues in New York and New Jersey, a
port authority task force recommended several measures, such as more flexible
hours for gate operations and building more warehouse space to store imports
away from
docks. Port operators and others are now trying to implement
those ideas. In the last decade, the port authority has spent $2.7 billion in
upgrades at the port. Another $1.3
billion is being used to raise the Bayonne Bridge so that megaships can pass
underneath. Congestion relief can’t come soon enough for Jonathan Gold, vice
president
of supply chain and
customs policy at the National Retail Federation, which represents some
of the nation’s largest retailers. “We
can’t have U.S. ports acting as a barrier to
trade,” he says. “We’re shooting ourselves in the foot.”
Source: WSJ, Arian Campo-Flores at _arian.campo-flores@wsj.com_
(mailto:arian.campo-flores@wsj.com) and
Cameron McWhirter at _cameron.mcwhirter@wsj.com_
(mailto:cameron.mcwhirter@wsj.com)
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