1. Voided sailings and Lack of Equipment for Export Bookings
While the import demand and capacity pendulum has swung from one extreme to another, unfortunately the end result for exporters remains the same. Over the past several years, it was the ocean carriers’ preference for imports over exports that contributed to the main cause of the lack of export capacity. There continues to be further constraint on the capacity needed to support US exports due to voided import vessel sailings, and a lack of container and chassis equipment particularly at some inland locations.
2. Space and Availability Constraints
With US export volumes rebounding exporters continue to face the same challenges regarding space and availability of bookings.
Often customers and prospects call Laufer wanting to have a “rate conversation” about meeting a certain rate for a booking. But these days, depending on the point of origin and trade lanes involved, the real conversation is about where and when space is available, and balancing wait times and unanticipated operational expenses on potential bookings against the business cost of longer departure delays.
For example, on the US west coast, ocean carriers might (reports say as much as 25% of the time) skip a smaller port like Oakland after calling LA/Long Beach. Factors like this can severely limit space and drive a need for creative thinking and quick moves, as well as forcing some exporters to accept a higher rate to get their cargo on a ship.
3. Carrier reliability and Last-minute Earliest Return Date (ERD) Changes
Set by the ocean carrier, the earliest return date (ERD) is the first day an exporter’s container can arrive at the terminal without incurring fees. Historically, and more often since the emergence of COVID, carriers would push out the ERD, if they changed it all.
Just like the experience in 2022, we continue to see the practice of carriers advancing the ERD earlier and compressing the time needed to return the loaded container to the port. Typically, this results in insufficient notice for exporters to adapt to the change and revamp their logistics to make the new, earlier date. The impact is often missed bookings and/or extra costs of $100 to $1,000-plus per container for trucking, chassis usage, drayage and more. What’s causing this? Basic carrier unpredictability reverberating down to exporters. Often ships are delayed, but sometimes they get into port sooner than predicted, or are offloaded faster. Lately there has been some improvement in ocean reliability, but at around 53 percent, performance remains well below pre-pandemic levels, where at that time, though still not ideal, levels were in the range of 70 percent.
4. West Coast and East Coast Port Operation Issues
On both coasts, terminals are being impacted by operational driven changes to gate hours severely limiting trucker access to pick-up empty/return laden containers.
At the Northwest Seaport Alliance port of Seattle, the terminals are reducing the in-gating window for export cargo from five days to four by closing the gates on Fridays as well as decreasing the daily working hours. This is having a large impact on gate and yard functionality and truckers are experiencing especially big backups first thing in the morning and again right after lunch. The gates are now closed for lunch from 11:50 am to 1:00 pm where previously port labor had worked through the lunch hour.
On the East Coast, the Georgia Ports Authority (GPA) has discontinued evening truck hours at the Port of Savannah as well as the use of several inland pop-up storage yards as volumes moving through the gateway have slowed significantly in recent months.
Further south along the coast, we have reports of similar reductions in hours (not workdays) at Oakland, Los Angeles, and Long Beach ports.
5. Labor Uncertainty
On the west coast, despite both parties saying they “remain hopeful of reaching a deal soon.”, labor negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) continue to drag on well past the July 1st 2022 expiration of the previous contract. The uncertainty of the ongoing negotiations has driven many cargo owners into shifting more of their business to ports on the East Coast and Gulf Coast.
Though the West Coast negotiations continue to get most of the media headlines, attention is beginning to turn toward the East and Gulf Coasts as well. Unions representing dockworkers across 36 ports stretching from Maine to Texas opened contract talks with their local employers well ahead of the current deal’s expiration date of Sept. 30, 2024.
Next steps
With such high unpredictability and added costs across so many aspects of export logistics, times like these require a flexible approach and the ability to deliver customized solutions that fit specific scenarios. We recommend exporters focus on the following:
- Forecast - Provide advanced forecast information to your supply chain partners to secure and ensure trucking capacity and ocean equipment so that it is available when you need it.
- Book - Book in advance - Schedule loads at least 2 weeks in advance whenever possible.
- Partner - Schedule time to collaborate with your current logistics provider to understand the current market constraints and develop a plan together to overcome these challenges.
Despite ongoing challenges, Laufer is consistently finding creative ways to move cargo and meet our customers’ needs. We are here to help and have solutions that are helping other exporters now. Please contact your local Laufer sales or operations representative to discuss options to solve your export challenges.