Los Angeles and Long Beach Terminal Congestions

CAUSE

  1. Larger Vessels. Currently, more than 10,000 TEU vessels are cascading down to the transpacific trade from the Asia-Europe trade. While this reduces costs due to scale, the terminals have not evolved to manage the operations of these vessels.
  2. Incremental Volumes. Due to a possible strike over the USWC, most retailers took precautions and have been moving a high level of inventory replenishment in preparation for a robust year-end shopping season.
  3. Labor Discussion. No deal has been inked despite publications over an agreement on the healthcare issue. While the ILWU labor continues to work, the lack of contract limits arbitration. There have been perceived slowdowns through increased inspection that continue to exacerbate the situation.
  4. Chassis Shortages. Carriers have continued to divest these assets which have caused dislocation of chassis and imbalance between the chassis providers with the terminals.
  5. Carrier Alliances. The continued evolution of Vessel Sharing Agreements is putting additional pressure on terminals as they make changes to accommodate the alliance changes.
  6. Truck Power. The lack of drivers add pressure to the industry, especially as it relates to the movement of containers as some terminals have moved from a wheeled to a grounded operation. Additionally, the turn times at the ports are currently poor.
  7. Intermodal. This is the primary mode of transportation inland throughout the United States and will continue to compete for capacity with the oil and gas industry and truck-intermodal conversion moves into the interior of the United States. This will continue to be a challenge as long as the oil price per barrel remains above $70 (USD).
  8. Free Time. Most retailers have extensive free time which is tying up the empty containers and chassis.

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