Market Letters

10 steps to minimize disruption and cost during the TP Eastbound volume surge

As COVID-19 trade restrictions ease, the volume of container imports in the Transpacific (TP) Trade Lane is not just increasing, its surging. This significant and rapid increase in volume is creating chaotic conditions at US ports – a trend that is expected to continue through October and most likely beyond. The resulting chaos doesn’t subside once your goods have arrived safely at US ports. Given challenges in the current environment, many issues are impacting the efficient and timely flow of cargo from port to its ultimate destination.

For example:

  • Turn times for drayage carriers picking up containers at Los Angeles and Long Beach ports climbed 13 percent from July to August, hitting their highest level since March. The LA-LB port complex has numerous choke points that can delay getting freight onto the rails or roads to distribution hubs in Chicago, Denver, Dallas, or Atlanta.
  • Labor availability and efficiency resulting from implementation of social distancing protocols have been negatively impacting port, trucking and warehouse facilities slowing operations and creating further delays.
  • Chassis shortages – due to backups at warehouses caused by COVID-19 restrictions many shippers are holding containers up to 6 to 8 weeks where normally they would be turned with 3-5 days.

To overcome economic uncertainty and potential disruptions in your supply chain, here are 10 ways to help minimize slowdowns and additional charges at US ports and inland destinations.

  1. Know your dates and numbers. The number of containers that are booked and the date they will arrive is vital to know to ensure the best productivity from your supply chain. Knowing where your inventory is and when it will arrive is essential so that there are no slowdowns or surprises throughout your supply chain.
  2. Correctly anticipate your volume. It’s important to know the amount of inventory you’re importing so you can accurately inform your logistics partners and everyone in the supply chain can be prepared.
  3. Limit your number of containers per bill of lading. Having this flexibility may improve and increase your booking options at origin while at the same time help mitigate delays and costs upon arrival from issues such as customs holds and exams.
  4. Know the current capacity of your warehouse. If your warehouse is full or has limited staffing, freight volume surge may result in untimely unloading of containers and an increase in detention costs.
  5. Check for alternate routes on rail inland destinations. There may be a variety of ports of entry to get your goods to their ultimate destination. Look for opportunities to move goods utilizing multiple gateways to stagger rail arrival times. For example, it might be less expensive to get your inventory to Chicago via Canada rather than a US port however if long dwell time exist over Canadian gateways the cost savings goes out the window if sales are lost A good idea is to utilize both US and Canadian gateways to hedge against delays, stagger container arrivals and most importantly have freight available for inventory when you need and increase your odds on having freight available when you need it!
  6. Review turn times for equipment and containers. Despite the ongoing trade war, the flow of goods from China to the U.S. has not subsided. As a result, shipping rates have increased and so have turn times. If you were already utilizing the majority of your free time turning the containers and chassis around, there is a good chance during a congestion period that your shipments exceed the free time. Look now on what is causing the long turn times and take action before it’s too late.
  7. Consult your drayage carriers about delivery preference. Drayage is how freight is hauled over a short distance from port to inland warehouses, distribution centers, or stores. There are a few classifications of drayage services, such as expedited, inter/intra-carrier, shuttle, pier, and door-to-door. You should consult with your drayage carrier to determine which type of service best serves your shipping needs.
  8. Pre-approve the use of container pre-pulls. To help avoid demurrage fees at ports or rail yards, a pre-pull may be available where the trucker pulls a container from the port and temporarily stores it at their secure facility until it can be delivered to its destination.
  9. Make sure your warehouse has flexible delivery terms. Is your business operating on drop and pick or live unload? A drop and pick is when the truck drops off your container at the warehouse and picks up a different one. A live unload is when the warehouse unloads the container while the driver waits to return it to the port. Drop and picks are less expensive but are only possible when you have containers arriving every few days. You should consult your provider to see if they offer both options and to determine which service is right for your budget.
  10. Schedule a call with your current logistics provider. Unnecessary cost accruals can be avoided by simply keeping the channel of communication open with your logistics provider. Ask where the bottlenecks are likely to occur or already taking place. Communicate and work with your supply chain partners to create a strategy to avoid or limit the exposure. Market wide bottlenecks in times of cargo surge might not be avoidable however it’s often manageable when steps are taken to lessen the exposure.

For over 70 years, Laufer Group International Ltd. has been helping customers improve the way they handle their logistics. To see how we can help, or for any questions, contact Brian Martorano, National Director of Business Development, Ocean Import or contact your local sales representative.