Five years ago, the Xin Ou Zhou would have turned heads in the Port of Long Beach, California, because of its sheer size.
The China Shipping Container Lines vessel is 334m long, 42.8m wide and can carry 8,530 20ft equivalent units of containers, a standard measure of ship capacity.
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But the Xin Ou Zhou, which was launched in 2007, is now one of the smaller container ships arriving laden at Long Beach or the nearby Port of Los Angeles from across the Pacific. Other vessels are attracting attention, such as Cosco’s Cosco Development. Completed in 2011, she is 366m long, 48.2m wide and able to carry 13,092 TEUs of containers.
The transformation in scale has hugely improved the efficiency of container transport, allowing shipping lines to reduce the number of sailings while carrying the same cargo or more. Two vessels like the Cosco Development can carry the same cargo as three the size of the Xin Ou Zhou. Shipping lines have formed new, bigger alliances to make the most efficient possible use of the new vessels. Lines carry other alliance members’ cargo on their own vessels.
But the change has also over the past few months often left the container stacking areas along the quays in Los Angeles and Long Beach full to overflowing. Terminals have struggled to handle the volumes of containers during the traditional August to December peak shipping season. Up to 18 vessels have sometimes been left waiting outside the twin ports, which together handled 41 per cent of US container traffic in 2013.
Terminal operators, port authorities, shipping lines and railroads are working together to try to resolve the congestion crisis, the worst at US ports since 2004. Similar problems, but on a smaller scale, have also affected other big container terminals on the Pacific Coast, including Seattle and Oakland.
Mark Simon, assistant vice-president for the international container business of Union Pacific, operator of the US’ biggest rail network, says that before the arrival of the bigger ships, vessels would discharge cargo at different terminals around the port in far smaller quantities.
Instead of 5,000 TEUs coming off a ship, you now have 10,000 TEUs . . . In some cases, there are 13,000 TEU ships calling
- Mark Simon, Union Pacific
“Instead of 5,000 TEUs coming off a ship, you now have 10,000 TEUs,” he says. “In some cases, there are 13,000 TEU ships calling.”
Efforts to resolve the issues are being made amid a simmering industrial dispute that employers blame for creating or exacerbating problems. Members of the International Longshore and Warehouse Union — the dockers’ union at all the coast’s ports — have been working since July without a contract. The two sides have held periodic talks aimed at reaching a new deal but have so far failed.
The Pacific Maritime Association, which represents the employers, acknowledges that operational issues have led to some of the problems at LA and Long Beach. But it blames unofficial go-slows by the ILWU for many of the problems at the twin ports and all at other west coast facilities. The ILWU insists the problems result from the ports’ operational flaws.
Neil Davidson, ports analyst at London-based Drewry Shipping Consultants, says it is unclear how far union action is to blame for the disruption. But he says: “There are certainly some deeper issues that have to be addressed even after the contract is agreed.”
One relates to a decision by terminal operators this year to stop providing truckers with the chassis on which they haul containers to and from ports. The lack of alternative sources created a shortage.
That problem was exacerbated when terminals started to fill up and operators began to refuse to accept deliveries of empty containers, which then sat outside on some of the few available chassis.
Noel Hacegaba, chief commercial officer for the Port of Long Beach, says the port tried to ease the problem by buying 3,000 new chassis for truckers to use. It also set up a storage site for empty containers.
For Union Pacific, one of the biggest challenges has been multiple shipping lines’ cargo on each vessel, says Mr Simon, meaning goods need far more sorting before they can be loaded on to trains. Union Pacific is working with shipping lines to ensure clumps of containers heading to the same destinations are grouped together to minimise sorting.
Mr Davidson says the most basic problems are longstanding. US container terminals are the least productive in the developed world, largely because operators, worrying about labour unrest, have been reluctant to invest in modern equipment.
The challenges on the US west coast are particularly acute because port authorities traditionally created multiple terminals in each facility for individual shipping lines. Those small facilities have been easily overwhelmed by deliveries from big new ships.
“There are some fundamental issues underneath it all,” Mr Davidson says. “There’s all this latent capacity that doesn’t get used.”
Port operators insist they intend to address some of these longer term issues once the immediate crisis is over.
Mr Hacegaba says emergency measures, plus the diversion of some ships away from the most congested ports, and seasonal declines in cargo volumes, had helped to ease the challenges. “We see signs of improvement,” he adds.
But Jonathan Gold, head of supply chain for the US National Retail Federation, says many problems will remain until labour leaders and employers settle their dispute.
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