Life's Evolution

Congestion Issues Across LA Ports Threatening Global Transport Sector

Written by Timothy Werth

Approximately 73% of the U.S.’s workforce — about 100 million people — are “knowledge workers” who work primarily in open office environments. The rest of the nation’s workforce, however, work in much more laborious environments, meaning they carry out strenuous and difficult tasks on a consistent basis. The trucking and shipping industry, for instance, which is as vital as any sector, deals with all sorts of physically straining jobs.

Ships are the most common way to transport cargo, accounting for as much as 95% of the world’s cargo. Unfortunately, according to Benzinga, congestion at Los Angeles (and New York) terminals has pushed drayage — the transport of goods — costs higher, making an already difficult industry even more difficult.

STG Logistics has recently stated that it is having to pay a substantial amount of demurrage (a charge payable to the owner of a chartered ship) due to empty container returns being delayed due to congestion.

In order to combat this issue plaguing the entire global transport sector, STG Logistics plans on increasing pay to drayage providers in order to recruit more workers to work through the congestion at the port and address the empty shipping containers in shipping yards across Los Angeles.

“If it’s going to take a driver five hours to get in and out, it trims down how much they can make in a day,” said an operations manager for an east coast logistics provider. “It really decreases what drivers are willing to do.”

Across the entire supply chain, costs are raising due to these congestion issues. Now, terminals and ocean carriers are charging between $100 and $250 per day for shippers that are delayed during return or pickup. Similar, drayage carriers are charging wait fees of $75 an hour for workers sitting idles at long terminal queues.

“Congestion in LA and Long Beach is now at peak, which normally occurs in November,” said an apparel shipper. “Appointments are full and nearly all containers are at LFD [last day free]. Another trend is that more draymen are automatically placing in their tariff a minimum five days’ chassis rental to cover congestion upon empty returns.”

Additionally, according to JOC.com, executives at the Southern California ports, which are on track to handle a companied total of more than 16 million twenty-foot equivalent (TEU) containers throughout 2019, conceded that terminal congestion and equipment shortages are causing significant issues at the harbor and across the coasts. Port officials have proposed roughly a dozen action items in order to help alleviate the congestion, but many of them are long-term (and expensive) projects.

About the author

Timothy Werth