Intermodal Chassis Availability for Containerized Agricultural Exports
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INTERMODAL CHASSIS AVAILABILITY FOR CONTAINERIZED AGRICULTURAL EXPORTS A Case Study of the Ports of Los Angeles, Long Beach, and Oakland Cyrus Ramezani, Ph.D. [email protected] Chris Carr, J.D. [email protected] Orfalea College of Business California Polytechnic State University 1 Grand Avenue San Luis Obispo, California 93407 Report Prepared for USDA-AMS USDA Cooperative Agreement No. 19-TMTSD-CA-0003 25 February 2021 ACKNOWLEDGMENTS This research was supported by Cooperative Agreement Number 19-TMTSD-CA-0003 with the Agricultural Marketing Services (AMS) of the U.S. Department of Agriculture (USDA). The opin- ions and conclusions expressed here are those of the authors and do not necessarily represent those of USDA or AMS. The authors gratefully acknowledge industry participants, including agricultural exporters, ship- pers, freight forwarders, chassis providers, motor carriers, and various Ports’ staff, for their input and data related to this research. Mr. Kevin Gard served as an outstanding graduate research assistant on this project. Any errors or omissions are the sole responsibility of the authors. Contents List of Tables 5 List of Figures6 Executive Summary7 1 Introduction and Problem Statement9 2 Objectives and Scope of the Study 11 3 Methodology 14 4 U.S. and California Agricultural Exports 15 4.1 Containerized Agricultural Exports.......................... 23 5 Containerized Agricultural Exports Through California Ports 25 5.1 Port of Los Angeles.................................. 27 5.2 Port of Long Beach.................................. 36 5.3 Port of Oakland.................................... 45 6 The Rise of Mega Ships and Chassis Shortages 54 6.1 Mapping Container Volume to Chassis Demand and Supply............. 61 6.2 Chassis Supply at California Ports.......................... 70 6.2.1 San Pedro Bay Ports............................. 71 6.2.2 Port of Oakland................................ 73 7 Proposed Chassis Solutions for California Ports 74 7.1 Incentivize Chassis Ownership and Long-Term Leases............... 76 7.2 Develop a Dedicated Chassis Pool to Serve Agricultural Exporters......... 76 8 Conclusions and Directions for Future Research 81 9 Appendix A: Supporting Data Tables 82 10 Appendix B: U.S. Chassis Provisioning Models 97 10.1 Conventional Ocean Carrier Chassis Model..................... 97 10.2 Regional Cooperative (Co-op) and Alliance Co-op Chassis Pool Model....... 98 10.3 Neutral/Gray Chassis Pool Model.......................... 98 10.4 Terminal Pool Chassis Model............................. 99 10.5 Motor Carrier Supplied Chassis Model........................ 99 10.6 Chassis Provider Independent Pool Model...................... 100 10.7 Market Pool...................................... 100 10.8 Not-for-Profit Chassis Pool Cooperative....................... 101 10.9 The Role of Chassis Manufacturing and Sales in Chassis Supply.......... 101 11 Additional References 103 List of Tables 4.1: Top 10 United States High Value Product Exports ($B).................. 18 4.2: Top 15 U.S. Agricultural Export Destinations (% of Total), by Calendar Year...... 19 4.3: California Agricultural Products Export Values ($M)................... 20 4.4: California’s Share of U.S. Agricultural Exports (%) by Commodity........... 21 4.5: Shares of California agricultural exports (%) by Destinations............... 22 LA.1: Port of Los Angeles Total Agricultural Exports (TEUs and % of Total)........ 32 LA.2: Port of Los Angeles Top 10 Containerized Agricultural Exports (TEUs)........ 33 LB.1: Port of Long Beach Total Agricultural Exports (TEUs and % of Total)......... 41 LB.2: Port of Long Beach Top 10 Containerized Agricultural Exports (TEUs)........ 42 O.1: Port of Oakland Total Agricultural Exports (TEUs and % of Total)........... 50 O.2: Port of Oakland Top 10 Containerized Agricultural Exports (TEUs)........... 51 7.1: Transportation Concerns of Agricultural Exporters.................... 75 4.1A: U.S. Exports of Bulk and High-Valued Agricultural Products (HVP).......... 82 4.2A: Composition of High Value Product Exports (% of Total HPV)............. 83 LA-1A: Port of Los Angeles Aggregate Container Movement................ 84 LA-2A: Port of Los Angeles Empty Container Volume.................... 85 LA-3A: Port of Los Angeles, Containerized Agricultural Exports (TEUs).......... 86 LB-1A: Port of Long Beach Aggregate Container Movement................. 87 LB-2A: Port of Long Beach Empty Container Volume..................... 88 LB-3A: Port of Long Beach, Containerized Agricultural Exports (TEUs)........... 89 O-1A: Port of Oakland Aggregate Container Movement................... 90 O-2A: Port of Oakland Empty Container Volume....................... 91 O-3A: Port of Oakland, Containerized Agricultural Exports (TEUs)............. 92 6.1A: Number of Container Vessels by Size in TEUs..................... 93 6.2A: Capacity of Container Vessels (TEUs).......................... 94 6.3A: Capacity of Container Ships Calling on U.S. Ports (TEUs)............... 95 6.4A: Average Monthly Container Freight Rates ($)...................... 96 List of Figures 2.1: Dynamics of Container Volume at California Ports.................... 12 4.1: U.S. Exports of Bulk and High-Valued Agricultural Products............... 16 4.2: Composition of High Value Product Exports (% of Total HPV).............. 17 LA.1: Port of Los Angeles Monthly Export Container Movement............... 28 LA.2: Port of Los Angeles Monthly Import Container Movement............... 29 LA.3: Port of Los Angeles Monthly Net Container Movement................ 30 LA.4: Port of Los Angeles Monthly Empty Container Movement............... 31 LA.5: Port of Los Angeles, Containerized Agricultural Exports................ 34 LA.6: Port of Los Angeles Containerized Edible Nuts Exports................ 35 LB.1: Port of Long Beach Monthly Export Container Movement............... 37 LB.2: Port of Long Beach Monthly Import Container Movement............... 38 LB.3: Port of Long Beach Monthly Net Container Movement................. 39 LB.4: Port of Long Beach Monthly Empty Container Movement............... 40 LB.5: Port of Long Beach, Containerized Agricultural Exports................ 43 LB.6: Port of Long Beach Containerized Edible Nuts Exports................. 44 O.1: Port of Oakland Monthly Export Container Movement.................. 46 O.2: Port of Oakland Monthly Import Container Movement.................. 47 O.3: Port of Oakland Monthly Net Container Movement................... 48 O.4: Port of Oakland Monthly Empty Container Movement.................. 49 O.5: Port of Oakland, Containerized Agricultural Exports................... 52 O.6: Port of Oakland Containerized Edible Nuts Exports................... 53 6.1: Monthly Container Freight Rates (20-ft and 40-ft $)................... 56 6.2: Distribution of Monthly Container Freight Rates (20-ft $)................ 57 6.3: Distribution of Monthly Container Freight Rates (40-ft $)................ 58 6.4: Asymmetric Container Freight Rates (40-ft $)....................... 59 6.5: Advantages and Disadvantages of Chassis Supply Models................ 63 6.6: Use of Chassis in Import and Export of Containerized Freight.............. 64 6.7: Container Movement Patterns - Without On-Dock Rail Terminal............. 66 6.8: Container Movement Patterns - With On- or Off-Dock Rail Terminals.......... 68 Executive Summary Containerized shipping accounts for a significant percentage of United State’s international trade. The provisioning of the “appropriate” container and chassis is critical to the success of U.S. agri- cultural exports. The availability of containers and chassis is viewed by many market participants as one of the most significant sources of inefficiencies in the intermodal logistics system, and a major impediment to expanding U.S. agricultural exports. This study addresses the factors that impact the provisioning of “the right” containers and chassis at the “right time” for the movement of agricultural commodities through the Ports of Los Angeles, Long Beach, and Oakland. The volume of containers transiting through these ports has grown several fold since the 1990s. This trend mirrors growth in trade, particularly with Asia- Pacific countries. The container volume data attaching to these ports shows large variability in monthly volume movements. Excessive volume variability creates significant uncertainty, causing planning and execution problems for the various stakeholders in the import-export logistics chain. This is particularly true for truckers, shippers, and freight forwarders serving the agricultural export sector, as the “optimal period” for exporting food products usually coincides with the peak of import-export volume imbalance at these ports. A broad overview of U.S. trade over the past decades reveals that agricultural exports have grown by more than seven-fold. Over this period, agricultural exports have shifted away from “bulk” to “high value products” (HVPs). A large portion of HVPs, grown in California and the rest of the nation, are exported from these three ports. Economic development and increased pros- perity in the Asia-Pacific region has resulted in significant increased demand for U.S. agricultural products. At the same time, U.S. containerized imports originating from the Asia-Pacific region have grown exponentially, creating a large supply of empty containers needing to return to their port of origin, mostly in Asia. It is this growth in demand, the shift to HVP exports, an over-supply of empty containers,