The new ocean carrier alliance structure that began April 1, 2017 will impact all US ports because carriers will increase use of mega ships and will be calling the larger ports that can handle the capacity of the mega ships. Los Angeles-Long Beach (LA-LB) has ample terminal capacity to handle these mega ships but it will take coordination with everyone involved in the supply-chain to ensure smooth operations.
The alliances have launched more than 20 weekly vessels that have an average capacity of 9,000 twenty-foot-equivalent units (TEUs). These vessels will begin arriving in mid-April and all parties need to be prepared for the changes in terminals and the changes in the flow of operations. There will be more surges in arrival volumes due to the mega ships.
This is the first time that multiple alliances have launched a vessel sharing initiative all at the same time. Los Angeles and Long Beach will be impacted the most simply due to volume. LA-LB has 13 container terminals that handle more than 15 million TEUs per year.
The three alliances, 2M, Ocean, and THE Alliance account for 90 percent of Trans-Pacific vessel capacity. There are also four non-alliance carriers that call LA-LB adding to the complexity of the potential congestion issues caused by the new alliances.
Two years ago LA-LB established a supply-chain optimization task force that works to conquer issues related to congestion. Monthly truck visit times are improving according to the Harbor Trucking Association. The improvements are said to be a result of increased collaboration from all stakeholders. It is hoped that this collaboration will continue as the terminals adjust to the new alliance operations.
Other news impacting LA-LB is a proposed fee on containers moving through California ports to support the state’s environmental efforts. The proposed fee is $100 per TEU and would contribute to the South Coast Air Quality Management District’s goal of using near-zero emission trucks and equipment in California.
This fee could sway beneficial cargo owners (BCOs) to consider using other ports to avoid the charge. In a study conducted about how BCOs chose a port of entry it was found that ocean, rail and trucking costs were all considered as well as cargo value, inventory carrying costs, port charges and total transit time.
The mega ships with increased capacity that will be calling the East Coast could result in lower ocean freight rates which could take away from the West Coast market share. BCOs need to consider all factors when choosing a port of entry and this $100 fee, if implemented, will be another destination charge to evaluate.