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How empty boxes worsened stress on the US supply chain

A chronic shortage of truck drivers is bedevilling US supply chains, leaving businesses struggling to secure the products they need. But when Matt Schrap visited a truck yard near the twin California seaports of Los Angeles and Long Beach recently, he saw 20 trucks idle.

The scene pointed to another factor in the nation’s goods delivery problems: empty shipping containers. As they sit at ports awaiting their return to exporters, many are taking up space on chassis — the specialised trailers that drivers need to pick up full containers arriving from Asia.

“It’s really gumming up the works,” said Schrap, head of the Harbor Trucking Association. “Because we can’t pick up these chassis, we’re actually sending guys home.” 

The empty container problem has become a priority for port operators, ocean carriers and the Biden administration as they work to fix a supply chain stretched by surging consumer demand.

Gene Seroka, executive director of the Port of Los Angeles, said this week that 65,000 empty containers were on its docks, up from 55,000 a couple of weeks ago. Data from three large chassis pool operators shows that 90 per cent of all chassis in the ports are now in use, up from 75 per cent in January.

At the same time, the number of container ships at anchor outside the Los Angeles and Long Beach ports, in line to unload, hit a new record of 86 this week.

The situation was set in motion earlier this year, when containers were stranded in the middle of the country because some truckers did not want to drive empty boxes back to the coasts. More money could be earned carrying full loads, according to supply chain experts.

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In response, shipping groups began to keep containers close to the docks, exacerbating the pile-up around ports, industry executives said.

Caitlin Murphy, chief executive of Global Gateway Logistics, a Missouri-based freight forwarder, said she has had difficulty since May getting cargo moved inland by train from Los Angeles and Long Beach.

“Normally, loaded containers should be moving by rail to inland points; they’re no longer doing that,” she said, because the shipping groups which own or lease the boxes “want those containers to be available to go back to Asia”.

She urged the Biden administration to focus more on getting rail service running smoothly, as opposed to focusing largely on the seaports. “Cutting off the rail choked the supply chain,” she said.

Keith Winter, chief executive of Crane Worldwide Logistics, another freight forwarder, echoed her concern, saying that ocean carriers had become more conservative about offering slots to move cargo by rail, limiting the usual flow of containers to inland hubs.

The shortage of containers in the US interior in turn has affected exporters who would usually load the empty boxes up with goods for international markets, said Michael Farlekas, chief executive of E2open, which produces software for booking ocean freight.

More than 80 per cent of the containers exported from the Port of Los Angeles in September were empty, the New York Times reported recently, up from about two-thirds in September 2020 and September 2019.

The US used to have more uses for “empty” containers, until exports of recyclable materials to China stopped in 2018, noted Lisa Ellram, professor of supply chain management at Miami University. “This helped the back flow to China,” she added, since the US imports more than it exports.

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But “chaos” at the ports themselves — which have tens of thousands of importers, thousands of truck drivers, almost 20 different terminal operators and few centralised controls — is part of the problem, she added.

Southern California port operators have tried to unblock the staging areas where containers are piling up, announcing in late October that they would introduce surcharges on containers left too long on their facilities, with fines ratcheting up from $100 per container a day.

Though the surcharges are not due to go into effect until Monday, Seroka said this week the number of containers that would be subject to them had since dropped by about 29 per cent.

Ocean carriers have arranged for six “sweeper ships” to pick up about 17,500 20-foot equivalent units of empty containers, he added, and another two are on the way. Pete Buttigieg, Biden’s transportation secretary, hailed their arrival on Twitter, but Schrap and others say far more will be needed to clear the backlog.

Truckers’ biggest challenge is a more bureaucratic one, Schrap said: without an appointment to return an empty container, drivers cannot free up a chassis to pick up a full one. But the terminal operators inside the port complex will not accept empty boxes without knowing that a vessel will be arriving to remove them.

The Port of Los Angeles is working to provide incentives for truckers to bring in an empty container each time they pick up a new load, Ellram said. “They have to make it worth their while to put up with more delays,” she said.

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If it is not fixed fast, Schrap worries that the drivers who make their living shuttling loads in and out of the ports will look for other work. “It’s ridiculous,” he warned: “If they don’t get work here, they’re in high demand. What’s stopping them from going and looking for another driving job?”


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