Wednesday, January 14, 2015


What are the SMEs and non-800 pound gorilla shippers doing to get on ships and to work out alternative ways?

Shippers find ways to work around port congestion

Nissan and Walmart say they have effective plans to minimize impact of West Coast port delays.

Nissan and Walmart on Tuesday added their names to the list of publicly identified companies that are experiencing supply chain disruptions due to the cargo logjam at U.S. West Coast ports, but executives said they have been able to reroute shipments to meet inventory needs.
The twin ports of Los Angeles and Long Beach have been overwhelmed for more than a year by new shipping patterns associated with the use of super-sized container vessels deployed by ocean carriers. Port authorities, marine terminal operators, trucking companies, railroads, shippers and others in the port community were caught off guard by the changes, as existing infrastructure and logistics procedures proved inadequate to deal with the concentration of volumes. Congestion has intensified and spread along the coast since the beginning of November when longshoremen, engaged in a prolonged and increasingly testy labor negotiation with terminal operators, scaled back work assignments they accepted.
Inventory teams at Nissan monitor inbound parts, usually from Japan or China, as well as the dwell times at the ports on a daily basis “and we start forecasting if we’re going to overcome the delay on those parts or if we have to airfreight additional parts from the origin to come in place of those parts while they are still waiting,” Chris Styles, senior director of logistics at Nissan North America, said during a panel discussion on freight issues at the Transportation Research Board’s annual conference in Washington.
Nissan, which has an auto plant in Smyrna, Tenn., had a contingency plan in June to divert cargo to other ports because it anticipated the dock labor talks would drag out and had learned lessons from the 2002 lockout that shut ports down for 10 days, he said.
The Japanese auto maker is using ports on the East Coast when necessary and is also looking at the possibility of moving supplies to its assembly plan through ports in Mexico or Prince Rupert, Canada.
“We have diverted already some shipments that make sense, if we’re able to get the capacity,” Syles said. “Ideally, though, is to continue through the West Coast if they can clear up the disagreements.”
Walmart, the nation’s largest retailer, has flexibility because it operates seven import distribution centers around the country and can adjust its destination ports to support its warehouses and stores, Douglas Estrada, the company’s senior director of regional transportation, also said during audience questioning.
Walmart is heavily using the ports of Houston, Savannah and Virginia, he said. Estrada confirmed that the company induced an ocean carrier to make a special call at the Port of Virginia to offload cargo for the holiday season that was in danger of being delayed at other ports. (American Shipper reported on the tactic, without naming the retailer, in a January feature story on the Port of Virginia titled “On the Mend.”)
Styles predicted shippers like Nissan would react to the current congestion by permanently shifting a small percentage of cargo through alternative gateways if for no other reason than “you at least have a constantly open line of transport that you’re using that if you ever have to go back and expand it you’re already in the middle of it” rather than trying to start a new supply chain from scratch.
Importers and exporters, including Tommy Bahama, Perry Ellis, and Macy’s, have said in earnings calls and other public statements that the port delays weakened sales in the fourth quarter.
BNSF Railway officials said they are very concerned about the dysfunction at West Coast ports, Executive Chairman Matthew Rose said in a brief aside following a presentation at the TRB.
In Southern California, slow productivity at the Ports of Los Angeles and Long Beach has forced the railroad to stage trains up the mainline in San Bernadino and up to Barstow to wait for open track in terminals, he said.
"We’ve got an artificial constraint put into the supply chain. The ports are probably running at 60 to 75 percent of efficiency," Rose said.