Supply Chain Congestion: Are We Making Progress?
With Christmas around the corner, the state of supply chain congestion is a frequent topic in the headlines. In recent months, with the line of container ships growing to record numbers in San Pedro Bay, an array of initiatives have been implemented to try to achieve some level of relief.
Here, we’ll take a look at a few of the recent changes and collaborative efforts being applied to help make a dent in persistent supply chain congestion.
In a November 24th CNBC interview, Mario Cordero, executive director of the Port of Long Beach, expressed optimism about the progress being made to relieve supply chain congestion.
Although the number of ships waiting in line in San Pedro Bay has dropped in the past few weeks, some experts question how progress is being measured.
In a recent post, “Is the U.S. Moving Cargo and Filling the Shelves?”, Sal Mercogliano of GCaptain digs into current supply chain metrics and notes that the recent change in the queuing process makes it more difficult to visualize how long the line really is: “…it should be noted that many vessels are now holding position 350 miles off the coast and these ships are no longer being reported as waiting for berths. The ships out at sea are not showing up on the reports of the ports or the Marine Exchange of Southern California. …”
Greg Miller, Senior Editor of Freightwaves expressed the same concern: “The waiting container ships are still out there — more of them than ever. It’s just that more are over the horizon, where you can’t see them, thanks to the successful implementation of a new queuing system that began last week.”
The New Queuing System
The voluntary guidelines for the new queuing system were developed by an industry working group and released on November 11th.
A joint press release from the Pacific Maritime Association (PMA), the Pacific Merchant Shipping Association (PMSA) and the Marine Exchange of Southern California noted that within the prior process, container vessels entered the arrival queue “based on when they cross a line 20 nautical miles from the San Pedro Bay Port Complex.” Under the new system, which took effect on November 16th and did not apply to ships already in the arrival queue:
“The process calls for each vessel to be assigned a place in the arrival queue based on their departure time from their last port of call, and requires vessels to wait for an available berth approximately 150 miles off the California coast.”
“This process will allow vessels to slow their speed and spread out, reducing vessels at anchor before the onset of winter weather, in addition to reducing emissions near the coastline.”
“Vessels will operate outside the new boundaries known as the Safety and Air Quality Area, designed by the Marine Exchange of Southern California to limit the number of container vessels near the port complex.”
“While awaiting a berth, eastbound ships must remain 150 miles west of Southern California, while northbound and southbound ships must remain more than 50 miles from California and Mexico.”
“Vessels can come into the harbor for fuel, crew changes and regular ship business per normal processes.”
Quoted in the release, PMA CEO Jim McKenna said, “The new container vessel queuing process creates a fair and transparent system to reduce vessels at anchor near the Ports of Los Angeles and Long Beach. Designed through strong collaboration between the PMA, PMSA and Marine Exchange of Southern California, this new procedure will improve maritime safety and air quality while helping ensure ports operate as efficiently as possible.”
Changes to Port Calls
Temporary changes related to port calls and the adoption of new ports by some carriers might have a positive ripple effect on global port congestion. Here are several that have recently been reported by Container News.
Hapag-Lloyd adds JAXPORT in its AL3 service: “Hapag-Lloyd’s 7,000TEU Hudson Express has made its inaugural call to the Jacksonville Port Authority (JAXPORT) as part of the Atlantic Loop 3 (AL3) container service which links Europe and the United States.”
CMA CGM reschedules services to avoid congestion: “CMA CGM has published the revision of a couple of its services with port call removals, as an effort to confront the global port congestion.”
First Boxship Arrives at Port of Montreal Directly from China: “The Port of Montreal has received for the first time in history a container ship straight from China, without cargo transhipment in the Mediterranean.”
2M Alliance stops calling Felixstowe on AE7/Condor service: “The world's largest container shipping alliance, 2M Alliance has announced the removal of the Port of Felixstowe from its AE7/Condor service's rotation until March 2022.”
OOCL replaces Savannah with Charleston in Transatlantic service: “COSCO-owned Orient Overseas Container Line (OOCL) has announced the temporary replacement of Savannah with Charleston in its East Mediterranean – America (EMA) service.”
Expansion of West Coast Options
A factor that may help to decrease the congestion in the San Pedro port complex is the helping hand being offered by neighboring ports—like the Port of San Diego.
Another west coast port accepting additional cargo to help ease congestion is the Port of Hueneme. Like the Port of San Diego, it’s not able to handle the large container ships waiting to get into the ports of Los Angeles or Long Beach, but it can still accept cargo through various means, as described by Port Director and CEO Kristin Decas in this 23 ABC News report.
The U.S. Navy is also lending a hand by partnering with the Port of Hueneme. A joint statement issued by Naval Base Ventura County (NBVC) and the Port of Hueneme provides a description of the arrangement.
“Naval Base Ventura County (NBVC) in partnership with the Oxnard Harbor District (OHD)/Port of Hueneme (POH) has activated a standing joint use agreement (JUA) to provide U.S. Navy resources onboard Port of Hueneme in direct support of decreasing port congestion in Los Angeles County and reducing the national supply-chain shortage, Nov. 22, 2021,” The statement reads. “The Department of the Navy entered into a JUA in 2002 with the OHD, (replacing the 1994 Memorandum of Understanding) which authorizes commercial use of Wharf 3 onboard NBVC, including approximately 21 acres of contiguous land, buildings 546 and 548, and if available, up to an additional 10 acres of industrial land located outside of the Wharf 3 area.”
Quoted in the joint statement, Capt. Robert “Barr” Kimnach, commanding officer, NBVC, underscored the importance of such collaborative efforts: “The Navy recognizes the importance of being good neighbors with our local communities and makes every effort to provide support when current operational requirements allow. …The joint use agreement between Naval Base Ventura County and the Oxnard Harbor District is in direct support of reducing port congestion and the national supply-chain shortage and demonstrates one example of the positive, long-term partnership between the Navy and the local community.”
No matter how progress is being measured, the complex nature of the global supply chain means there will be no single solution or easy fix to address the unprecedented levels of congestion that may linger longer than we’d hoped. However, as evidenced in some of the scenarios described here, both individual initiatives and collaborative efforts may have a positive impact overall.
In the following SupplyChainBrain video, Bill Brooks, vice president of North America transportation with Capgemini, “delves into the multiple causes of the congestion that’s currently plaguing global supply chains, and speculates on some possible short- and long-term solutions to the crisis.”