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U.S. Port Congestion & Related International Supply Chain Issues

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U.S. Port Congestion & Related International Supply Chain Issues U;S; Container Port Congestion & Related International Supply Chain Issues: Causes, Consequences & Challenges (!n overview of discussions at the FM port forums) Image Sources 1) http://ecuadoratyourservice;com/live-in-ecuador/relocation-and-shipping-services/attachment/container-ship/ 2) http://www;pressherald;com/wp-content/uploads/2012/12/Port+Strike_!cco11;jpg 3) http://truckphoto;net/peterbilt-model-587-tractor-trailertruck-picture-photo;jpg 4) https://www;airandsurface;com/blog/wp-content/uploads/2014/02/Port-of_Long_each;jpg 5) http://www;performancecards;com/wp-content/uploads/2012/12/Warehouse;jpg 6) http://jurnalmaritim;com/wp-content/uploads/2015/03/arge9-21-09-km;jpg 7) "Portainer (gantry crane)" by M;Minderhoud - Own work; Licensed under Y-S! 3;0 via Wikimedia ommons - http://commons;wikimedia;org/wiki/File:Portainer_(gantry_crane);jpg#/media/File:Portainer_(gantry_crane);jpg 8) Norfolk Southern U;S; Container Port Congestion & Related International Supply Chain Issues: Causes, Consequences & Challenges (!n overview of discussions at the FM port forums) July 2015 U.S. Container Port Congestion and Related International Supply Chain Issues: Causes, Consequences and Challenges (An overview of discussions at the FMC port forums) Table of Contents Introduction Global Trade and the U.S. Economy ................................................................................................ 1 Industry Condition and Trends......................................................................................................... 3 Federal Government Interest in Port Performance and Port-Related Infrastructure ..................... 6 The FMC Port Forums ...................................................................................................................... 6 Other FMC Follow-Up Efforts ........................................................................................................... 8 Organization of the Report ............................................................................................................ 11 Capital Investment & Planning Framing the issues ......................................................................................................................... 13 Cross-section of stakeholder viewpoints ....................................................................................... 16 Stakeholder suggestions and proposed fixes ................................................................................. 19 Chassis Availability and Related Issues Framing the issues ......................................................................................................................... 23 Cross-section of stakeholder viewpoints ....................................................................................... 31 Stakeholder suggestions and proposed fixes ................................................................................. 35 Vessel and Terminal Operations Framing the issues ......................................................................................................................... 39 Cross-section of stakeholder viewpoints ....................................................................................... 42 Stakeholder suggestions and proposed fixes ................................................................................. 44 Port Drayage & Truck Turn-Time Framing the issues ......................................................................................................................... 51 Cross-section of stakeholder viewpoints ....................................................................................... 55 Stakeholder suggestions and proposed fixes ................................................................................. 57 Extended Hours, PierPASS, and Congestion Pricing Framing the issues ......................................................................................................................... 61 Cross-section of stakeholder viewpoints ....................................................................................... 64 Stakeholder suggestions and proposed fixes ................................................................................. 67 Collaboration and Communication Framing the issues ......................................................................................................................... 69 Cross-section of stakeholder viewpoints ....................................................................................... 70 Stakeholder suggestions and proposed fixes ................................................................................. 73 i Other Issues Demurrage & Detention ................................................................................................................ 75 Class I Railroads .............................................................................................................................. 76 Federal Partners in U.S. International Supply Chains .................................................................... 77 Congestion Costs ............................................................................................................................ 78 Port/Supply Chain Congestion Diagnostics as Identified by FMC Forum Participants .................. 81 Appendices Appendix A List of participants at the FMC public forums on port congestion and international supply chain efficiency Appendix B Container volumes at U.S. ports, January 2005 through December 2014 Appendix C Average size of containerships calling at U.S. ports and average number of containers exchanged Appendix D Glossary of Acronyms and Abbreviations ii Introduction Global Trade and the U.S. Economy Global trade is of increasing relevance to the U.S. economy. With the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) free trade agreements in advanced negotiation, it seems certain that the U.S. role in global trade will expand in the years to come and international trade will become even more engrained in the U.S. economy. According to the World Trade Organization (WTO), the dollar value of world merchandise trade was almost $19 trillion in 2014, $4 trillion of which (over 21%) was accounted for by the U.S.1 Moreover, the OECD projects that trade-related international freight will expand by a factor of 4.3 by 2050. While international trade through U.S. ports now accounts for around 32 percent of the nation’s economic output (GDP), this figure is expected to reach 60 percent by 2030.2 International trade helps to support U.S. jobs. In 2010, the latest year for which full data is available, nearly one quarter of all U.S. manufacturing and agricultural jobs were supported by exports.3 In today’s modern economy, over half of U.S. traded goods are comprised of intermediate inputs. Importantly, imports of intermediate goods are more sensitive to trade costs (including congestion costs) than are finished products. Because international trade and GDP are thoroughly linked, modern efficient ports are essential in facilitating international trade and in maintaining a healthy and vibrant economy. Given that future expansion of international trade is inevitable, future demands on the U.S. intermodal system will be considerable. However, compared with the nation’s dry bulk and liquid tanker trades, the nation’s merchandise trade is concentrated at a relatively small number of container ports (see the table below). Port Loaded TEUs (2014)4 Cumulative percentage of U.S. total 1 Los Angeles 5,881,556 18.6% 2 Long Beach 4,927,219 34.2% 3 New York/New Jersey 4,276,081 47.7% 4 Savannah 2,592,825 55.9% 5 Norfolk 1,931,479 62.0% 6 Houston 1,629,083 67.1% 7 Oakland 1,612,261 72.2% 8 Charleston 1,428,416 76.8% 9 Tacoma 1,371,178 81.1% 10 Port Everglades 755,843 83.5% 11 Seattle 751,779 85.9% All U.S. ports Combined 31,632,000 100% Source: PIERS Interactive, Federal Maritime Commission 1 World Trade Organization, Trade Statistics and Outlook, April 14, 2015. 2 American Association of Port Authorities, U.S. Public Port Facts. Accessed April 8, 2015, (http://www.aapa.ports.org/industry/content.cfm?Item Number=1032) 3 U.S. Department of Commerce, International Trade Administration, Office of Competition and Economic Analysis, Jobs Supported by Exports, 1993-2011. October 2012, p. 8. 4 The figures cited relate to international inbound and outbound full containers and, therefore, exclude the handling of empty, domestic, and transshipment containers. 1 The top three U.S. container ports in 2014 accounted for almost 50 percent of the nation’s containerized international trade and the top eleven container ports accounted for over 85 percent. About one-quarter by value of the trade in goods through U.S. seaports via vessels flows through the two main West Coast container ports. On the one hand, this concentration could help America focus resources on expanding the capacity of its most important container ports, but on the other it also makes the freight system more vulnerable to the sort of disruption and delays the industry experienced in the past year or so.5 Improved ocean shipping contributes to more efficient international supply chains. As the shipping system becomes more efficient, shipping costs relative to the value of finished products should fall. More efficient supply chains increase not only the volume of trade by lowering the cost of imported and exported goods but it also increases the distances over
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