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Who worries about port congestion in a down economy? Port executives, terminal operators, ocean carriers and shippers do. They know that the current lull in international trade is a temporary phenomenon. Serious congestion, of the kind that plagued major containerports and inland terminals just a few years back, could return with little warning.
That's why ports are looking now at ways to speed up the flow of international containers through their facilities. The options are many: new software, hardware, yard equipment, terminal-design changes, creative vessel-loading strategies and a complete rethinking of the process by which a container moves between the docks and its next step toward ultimate delivery.
As always, information lies at the very heart of an effective logistics strategy. Brian Mannelly, director of port planning at the Port of Tacoma, Wash., thinks that a centralized data exchange, perhaps hosted by the port, could be a valuable tool for coordinating all of the partners involved in handling a container. Such a service would link the outside world, including regional, intermodal and interstate systems, with all activities taking place on the terminal. At the gate, a scheduling system for trucks would cut down on wait time. Says Mannelly: "You would have the driver moving as quickly and efficiently as possible."
Some ports, particularly in Southern California, are already making use of a gate scheduling system to alleviate congestion and increase the number of trips that drivers can make in a day. But no such arrangement can work without the flow of accurate and timely information on the status of a load. Mannelly sees promise in wireless mesh networks, consisting of multiple communications nodes, which would allow all terminals, logistics providers and cargo owners to operate on one system. It's especially important, he says, that all parties utilize the same set of protocols for exchanging data.
Who would build such an overarching system remains to be seen. Tacoma executives are discussing the possibility of taking the lead, but nothing has been decided. "We would like to see this administered and proctored by the port," Mannelly says, "but it will not be successful unless all the stakeholders feel they are viable." Similar efforts are being driven by the private sector at other ports, he adds.
For a number of years, Tacoma has enjoyed the luxury of having substantial amounts of land available for construction of new container terminals, thanks to a treaty signed with the local Puyallup Indian tribe nearly 20 years ago. Now, with the economy in a slump and terminal-development costs rising, that option isn't so attractive. Instead, Tacoma and other ports are seeking to make better use of their existing terminal acreage. The focus, says Mannelly, is "on assets that are already in the ground."
Shifting patterns of trade are yet another factor that is forcing ports and shippers alike to reevaluate their operations. The severe congestion that plagued the ports of Los Angeles and Long Beach just a few years ago caused many trans-Pacific shipping lines to seek other ways of getting import containers into the U.S. Seattle and Tacoma in the Pacific Northwest, as well as Vancouver, B.C. to their immediate north, benefited to some extent from the change. But an even greater surge of new business was witnessed by facilities on the East and Gulf Coasts, when carriers upped their reliance on the Panama Canal and bypassed the West Coast altogether.
Houston Gains Business
The Port of Houston was among the biggest winners in the realignment. Wal-Mart Stores shifted a large portion of its containers from Asia into the Gulf. The move helped to spur development of Houston's new Bayport container terminal. Planning of that facility dates back to 1997; construction of the first phase began in 2004 and the gates opened in 2007, according to Roger Guenther, general manager of container terminals at the port. While he doesn't credit Wal-Mart specifically for Houston's recent growth in container volumes, he acknowledges that "big-box retailers have been a focal point of our trade-development division for quite some time." The port did garner additional business from mega-retailers in the form of containers that used to pass through the West Coast, he adds.
Guenther believes Houston will attract even more container traffic with completion of an expanded Panama Canal in 2014. (With the addition of a third set of locks, the maximum size of a containership that can transit the canal will rise from around 4,800 twenty-foot equivalent units, or TEU, to 12,600 TEU.) Bayport already has 110 acres of container yard and 2,000 feet of berthing; plans call for an expansion to 160 acres and 3,330 feet of berth by the end of next summer. Container throughput at Houston in 2008, including business at the port's other box terminal at Barbours Cut, was 1.8m TEU.
Houston is already planning technological enhancements at Bayport in order to handle the anticipated growth in cargo. Currently the gate does double duty as a processing point for inbound and outbound trucks. A new design calls for construction of separate entry and exit gates within the next two years. The port is further planning to implement optical character recognition (OCR) technology at current and future gates, to replace manual inspection of containers and chassis. Devices will take digital images to verify the condition of equipment when it enters and leaves the facility. In addition, the port has eliminated a "pre-gate" through which trucks originally had to pass so that container booking numbers could be validated prior to release of the boxes. Now they only have to negotiate a single gate for confirmation and inspection purposes.
No port spends money on technology and new processes just for the sake of it. Houston doesn't need an appointment system for truckers because it lacks large distribution centers in the immediate area and is therefore less subject to congestion, Guenther says. Still, the port is working to keep ahead of the curve as container business grows. From the day Bayport opened, he says, "it was in a constant state of improvement."
An enlarged Panama Canal will help East and Gulf Coast ports to siphon off an even greater share of trans-Pacific imports, but ports on the West Coast haven't given up hope. Oakland, which has long sold itself as a less-crowded alternative to Los Angeles and Long Beach, is counting on improvements in rail access to boost its fortunes. For many years, double-stack container trains leaving the port have had to travel nearly all the way to Southern California before turning east. That's because of physical bottlenecks on the alternative Central Corridor route, which crosses the Sierra Nevada mountain range at Donner Summit. Now, the Union Pacific Railroad is raising tunnel clearances and adding tracks to accommodate stack trains on that route, according to Lawrence Dunnigan, manager of business development and international marketing at the Port of Oakland. The modifications, which are close to completion, will give the port a straighter shot into the U.S. interior.
Oakland is eyeing water as another means of shuttling international containers to and from inland points. In partnership with the upriver ports of Sacramento and Stockton, it has applied for a $56m federal grant to launch a "marine highway" between Central California and the Oakland Harbor. Barges would carry containers along the river system that connects the facilities. In addition to giving shippers another option for reaching Oakland, the system would have a positive environmental impact, removing hundreds of trucks from the roads, Dunnigan says.
When it comes to marine terminal development, Oakland is taking more of a hands-off approach. Like most other major port facilities on the West Coast, it functions essentially as a landlord for terminal operators, limiting its role to the maintenance of wharves and berths. Recently it shifted more responsibility to the private sector, signing a 50-year agreement with Ports America, purportedly the largest terminal operator and stevedore in the America. By entering into the multi-year commitment, the port hopes to give private interests an incentive to make long-term investments in terminal expansion and new technology for attracting additional carrier business to Oakland.
A Threat to the West
If port consultant and designer John Vickerman is right, however, West Coast ports will face an even greater competitive challenge in the years to come. "I believe that after years of domination, [West Coast ports] are coming under much more scrutiny and are to a degree threatened," he says. A number of converging factors, including an expanded Panama Canal and pricing that favors a shift to Gulf and East Coast ports, will further erode their market base.
Ports in those regions are moving to take full advantage of the trend. A year ago, the State of Louisiana created a new deepwater port commission known as the Louisiana International Deepwater Gulf Transfer Terminal, a huge facility to be built at the mouth of the Mississippi River. There, large containerships would offload their international boxes for transfer to river craft. The setup would reach deep into the U.S. Midwest and give shippers a cost-efficient, reliable option for bringing in containers from Asia, says Vickerman, who today is president of Vickerman & Associates, LLC in Williamsburg, VA. He believes the waterborne shuttle option will gain favor as linehaul containerships grow even larger and generate enough volumes to justify short-sea transit. Such services are already well-established in Europe, especially along Germany's Rhine River.
Key to Vickerman's vision of the future is the dramatic growth of inland ports. The first such facility of any significant size was the Virginia Port Authority's Front Royal operation, 260 miles from the harbor at Hampton Roads. The idea was to intercept truck traffic along the eastern seaboard, and route freight to and from the port via rail. Supporting the complex is a network of inland distribution centers and logistics facilities, set up to process the international containers.
The inland port concept has blossomed in recent years, Vickerman says, citing the CenterPoint Intermodal operation in Kansas City, MO. It is a joint venture of the Kansas City Southern Railway, CenterPoint Properties of Chicago and Kansas City SmartPort. The complex offers around 1,350 acres of logistics park, an intermodal rail facility and some 7.4m square feet of warehousing and distribution space. Among the functions that can take place there is the transloading of international freight from ocean containers into larger, more cost-efficient domestic trailers.
CenterPoint Intermodal can work in conjunction with port complexes beyond the U.S. West Coast, such as Mexico's developing Port of Lazaro Cardenas. With an annual capacity target of 700,000 TEU in its first phase of construction and 2m TEU in future, the port offers deep water and direct access to the U.S. Midwest via the Kansas City Southern. A second Mexican port under development at Punta Colonet, south of San Diego, Calif., would also boast a direct inland connection by rail.
Currently there are around half a dozen major inland ports in operation around the U.S., and Vickerman expects many more to bloom. All promise to give shippers a means of accessing the heartland without encountering congestion or delays on the West Coast. The use of domestic equipment will allow ocean carriers to retrieve their international boxes faster, for return to Asia. What's more, the existence of inland ports can sharply lower the dwell time of containers on the docks, while making possible the "just-in-time" transfer of cargo between inland locations and the waterfront. The trend will have a significant impact on container flows across North America, Vickerman says, "if gateway ports and rails can fully coordinate their operations and information."
The Carrier's Role
A successful effort to speed up the system must involve all of the parties that touch the boxes. Ocean carriers are very much part of the mix. APL relies on careful pattern stowing of containers on its ships according to port rotation and type of inland connection, says Nathaniel Seeds, vice president of operations for the Americas. Stowage instructions are conveyed to terminal operators at the overseas origin port, using a series of priority codes. First off the ship are boxes moving under the OceanGuaranteed less-than-containerload service of APL and its intermodal partner, Con-way Freight. Also slated for immediate removal are containers destined to become part of double-stack unit trains, the first of which typically departs within eight hours of the vessel's arrival. "That tight, seamless intermodal connection is only possible through this code system," says Seeds.
APL relies mostly on the temporary stacking of containers in the terminal yard, instead of placing each offloaded box onto a truck chassis at dockside. Not only does the stacked configuration make for better utilization of terminal space, it speeds up vessel operations, says Seeds. The arrival of truckers can be closely coordinated with the retrieval of containers from the stacks. Seeds says marine terminals swing back and forth between stacked and wheeled operations depending on the level of activity, with the latter option favored by many West Coast ports today because of the downturn in trade volumes. But many of the world's highest-volume ports, such as Shanghai, Hong Kong, Singapore and Rotterdam, rely on a stacking strategy at all times.
Also popular during times of reduced international activity is the mixing of domestic and marine boxes in the port area. The Port of Tacoma has seen big increases in domestic operations at the South Intermodal Yard, operated by the Union Pacific Railroad. "Domestic service is just going through the roof," says Mannelly.
Technology providers are working on a variety of new systems to expedite container flow at ports and intermodal terminals. Much depends on the "pain points" of each facility, tied to land, labor and geographic considerations, says Mike Schwank, president of Tideworks Technology, Inc. in Seattle. Truck lanes can be automated so that a driver needn't interact with a human at the gate in order to clear paperwork. OCR and radio frequency identification help handlers to track each container without having to re-enter the information manually. Web access allows dispatchers, truckers and freight brokers, among others, to view the status of a container and spot any glitches in the process.
One terminal in Southern California, the Port of Long Beach's Pier A, can do 3,330 gate moves a day with just five people handling the transactions, Schwank says. For the future, he sees increased reliance on artificial intelligence and 3D visualization tools, to further reduce the need for staff and administrative processes.
Anne Landstrom, senior consultant with TranSystems in Kansas City, MO, says the focus now is on synchronizing rail and vessel linkages. A new container terminal at Prince Rupert, B.C. depends on the fastest possible transfer of boxes between modes, given that nearly all of the volumes moving through that facility have an origin or destination far from the relatively isolated port. In the coming years, she says, "Automation is going to be the way that you're going to get better productivity out of the same amount of acreage."
From the shipper's standpoint, visibility is the key. Exception-reporting systems can pinpoint any container that isn't moving according to plan, based on a number of pre-set milestones, says Joe O'Brien, managing director for North America with Hong Kong-based CargoSmart Ltd. Through exception management, shippers and carriers can monitor transshipment activity, pinpointing any box that has been sitting too long at a transfer point, he says. The newest systems, he says, incorporate milestones that range from the selection of an empty container to its final delivery.
John Motley, chief executive officer of LOG-NET in Red Bank, N.J., says it's important to monitor all of the potential problems that could arise, whether with a carrier, broker or drayage provider. Status information must flow from the factory in Asia to the carrier, broker and destination facility, in order to ensure the smooth flow of containers.
Shippers also must be able to assess the most effective gateways for their freight. LOG-NET's technology includes settings that create a "port delay" rating, showing where impediments crop up most frequently. The metric allows clients to route around problem facilities, whether due to congestion, labor strife or any other factor. That level of visibility provides yet another challenge for established loadports that are worried about losing business to more efficient newcomers, whether on other the coast or at inland locations.
Port of Houston, www.portofhouston.com
Port of Oakland, www.portofoakland.com
Port of Tacoma, www.portoftacoma.com
Tideworks Technology, www.tideworks.com
Vickerman & Associates, www.vickermanassociates.com
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