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Reduce Port Congestion By Expanding Container 'Free-Flow' Systems

Stakeholders at U.S. ports are spending $9bn a year to accommodate the next generation of super-sized container ships. But simply expanding physical infrastructure will not be enough to mitigate port congestion. With fewer vessels moving more containers per call, U.S. ports need to fundamentally change the way containers are moved in and out of terminals.

Reduce Port Congestion By Expanding Container 'Free-Flow' Systems

Providing small shippers access to free flow - a container delivery method currently only available to the largest beneficial cargo owners (BCOs) - would dramatically increase container throughout with minimal investment.

Port operations typically involve pulling containers off ships and placing them randomly into long rows. Truckers arrive at the terminal with a specific container number, and operators have to dig that container out of the pile. On average, three containers must be moved out of the way for every one container delivered.

But imagine if specific containers werenít assigned to a driver until after a container was loaded onto their truck. This would allow the ports to peel off the first available container and place it on the next available driver and chassis, much like a taxi line at the airport. Dead moves are eliminated and truck turn times are reduced. A free-flow study conducted at the Port of Los Angeles in early 2015 found that free-flowed containers reduced trucker turn times by more than 50 percent Ė from 85 minutes to 42 minutes.

High-volume shippers with 50 or more containers on a single vessel regularly free-flow containers. Because the containers typically have the same drop-off location, it doesnít matter which container a trucker receives, and no special technology is needed to coordinate the drivers.

Democratizing 'free flow'

Most shippers do not have enough containers per vessel to merit their own free-flow pile. But new systems combined with mobile technology can now be used to democratize free flow and make it available to smaller shippers.

After receiving a container, the driver would enter the container number into his phone, and delivery and routing information immediately would appear on his screen. The delivery could be directed to a distribution center or to an off-site yard for delivery at a later time.

The shipper would receive status notifications when the container has been picked up, when the driver is about to arrive, and when the container has been delivered.

After the driver drops the container, his phone would direct him to the empty closest to its Last Free Day (or in a first-in-first-out manner) to return empties back to the ports. If no empties are available at the drop-off location, the driverís phone routes him to a nearby yard that has empties to return (preferably to a terminal they are picking up from next).

Throughout the entire process, any stakeholder could pull up a map on their phone or computer and see the driverís precise location. In this way, technology-enabled free flow would not only move more containers out of the ports more efficiently, it would also provide greater transparency for shippers and carriers.

Establishing universal free-flow system

The greatest challenge to this expansion is getting key stakeholders to collaborate.

Accommodations will have to be made at each stage of the intermodal supply chain. However, if everyone gets on board, the benefits ó to both the logistics providers and the end customers ó will far outweigh any perceived risk. The following section outlines the challenges that need to be address in order to establish a universal free-flow system:

1. Dispatch re-imagined

Sending a driver to pick up a container without him knowing that containerís final destination is perhaps the most radical part of this whole proposal. Volume and technology will solve this issue. Port terminals can create separate free-flow piles by delivery region. This way drivers still can choose which areas they wish to service. Separate piles also can be created for hazmat, reefer and other specialized transport. The greater the number of containers running through free flow, the more possibilities for segmentation.

Free-flow piles also would include price ranges, so that drivers know exactly how much they can expect to make on each turn. Container rates would be standardized and determined by distance, time and the price of fuel. GPS tracking shows if and for how long a trucker is waiting at the gate.

Drivers may prefer to know where their container is headed before accepting it. But if forfeiting that knowledge results in an extra turn per day, they may be less resistant to change.

2. Off-docking

Off-docking is another way to expand free flow operations to smaller shippers. The practice is not as efficient as a universal free-flow system, as it only removes containers out of the ports and still requires a move to the off-dock prior to delivery to final destination. But off-docking could serve as a stepping stone towards a more universal free-flow system.

Dedicated capacity would move containers from the ports to the off-dock facility ó where time and space is less expensive ó and stacked in free-flow piles. This can provide a large benefit to the marine terminal operators and allow for next-day or appointment delivery to the containerís final destination.

Off-docking facilities are already in use at the SSA terminal in the Port of Los Angeles, with several other terminals looking into the idea.

3. Container stowage

Once free flow is at scale, it will need to be part of the stowage plan up stream. Coordinating storage on the front end will help crane operators safely and efficiently create free-flow piles at the port of call.

This coordination should be facilitated by the shipping lines, which stand to gain the most from adopting free flow. Not only will free flow reduce vessel call times, the product could be an effective marketing tool or sold as a premium service.

4. Capacity

As demand grows and volumes increase, truck capacity will have to keep pace. As long as free flow ensures more turns per day than the random-access method, drivers will want to participate because they will have access to higher revenues per day per truck.

Managing that capacity ó that is, ensuring it is available and drivers arrive at the terminal in timely intervals ó will be simple, as carriers will be registered with the same operating system that shippers use to book their drayage orders. If there arenít enough drivers to handle all the free-flow containers, dynamic pricing or a small fleet of dedicated drivers could help fill any gaps in supply.

Days before a ship calls, registered carriers will be able to see how many free-flow containers are coming in and can choose to accept as many as they wish.

Next steps

The stage is set for mass adoption of free flow. A pilot program at the Port of Los Angeles earlier this year resulted in a 500 percent increase in container throughput per shift. Trucker turn times were cut in half. The core technology is available and the need is real. The next step is education.

Once BCOs understand there is an alternative to port congestion and demurrage fees, free flow will be a powerful marketing tool for shipping lines and terminals looking to gain market share. The pitch is simple: Want to get the same preferential treatment at the ports that Walmart and Target enjoy? Ship with us and you get expedited free flow whether you have one container or 100.

Port operations havenít evolved much since the adoption of the shipping container ó arguably the most disruptive change to ever hit the logistics industry. The first container ships could be loaded and unloaded in almost one-sixth of the time required for conventional cargo ships and with about one-third of the labor.

However, the shipping container per se was not responsible for this massive increase in productivity. Without custom-built ships, massive landside cranes, and specialized chassis and railcars, transporting containers would be no more efficient than moving breakbulk cargo.

The true revolution was in getting shipping lines, port operators and railroad and trucking companies to understand that they were all part of a single, global supply chain serving the same end customer. Half a century later, industry-wide collaboration and support for free flow is under way to once again revolutionize the way freight moves around the globe.

Source: Cargomatic

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