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Shippers Find New Supply-Chain Hurdles at Alternate Ports

When Flexport Inc. learned in the past month that an ocean carrier planned to shift cargo from the congested operations at the Port of Los Angeles to little Port Hueneme some 80 miles up the California coast, the freight forwarder found that trucking companies weren’t ready to go along with the changing direction of the imports.

“We talked to trucking carriers throughout the market in L.A. and Oakland and the sense was that they could not support the volume if it moved through Port Hueneme,” said Jason Parker, the company’s head of trucking.

The San Francisco-based company shifted gears, pulling 200 containers from the ocean booking and instead routing many of them to Los Angeles despite a likely longer wait there to offload goods.

“The two-week delay coming to Los Angeles versus the Hueneme routing was going to cause less headache for the customers,” Mr. Parker said.

The choice highlighted how shippers looking to avoid bottlenecks at major gateways by diverting goods through alternate ports face tough tradeoffs and new questions. How do they get furniture, clothing, toys and other items to stores and warehouses that are far from their established supply lines and have modest transport connections to other parts of the country?

Smaller ports don’t have dozens of ships stacked up off the coast waiting for berth space, as do Los Angeles and the neighboring Port of Long Beach, Calif. The sites have drawn long looks from shippers and freight forwarders, and even brought them chartered ships from the growing number of retailers who are hiring vessels to get around the backups to get goods in stores for the holidays.

But most don’t have enough dock workers to unload cargo or a steady supply of truckers or warehouse space to handle a big jump in cargo volumes, said Anthony Hatch, a rail transportation analyst and principal at ABH Consulting.

“They make for nice stories,” Mr. Hatch said. “But they are all on the margin.”

The efforts have sent cargo to established West Coast gateways like the ports of Seattle and Oakland, Calif., and to destinations still farther from traditional container shipping trade lanes. The Port of Portland, Ore., which lost regularly scheduled container service in 2016, has recovered some operations and gained some charters this year. The Port of Hueneme, known mostly as an import gateway for Del Monte bananas, expects its first chartered container ship to arrive in November.

Ports on the East Coast like Baltimore and Port Tampa Bay, Fla., also are trumpeting congestion-free operations in an effort to lure container lines and their shipping customers.

The capacity at those ports pales against the operations at Los Angeles and Long Beach. That complex handled just over 6 million loaded inbound containers in the first seven months of the year, nearly 40% of all container imports that landed at U.S. ports over that time, according to Beacon Economics, a research firm based in Los Angeles.

The scale of the import business there has created a sprawling network of trucking, rail and warehousing operations aimed at delivering imports to U.S. markets, both for the big consumer base in Southern California or distribution centers and freight hubs reaching out to Chicago and other inland sites.

The ports’ high profile as an import gateway has grown as retailers have rushed to restock inventories that were depleted earlier in the pandemic, helping push some 1.1 million more containers through Los Angeles and Long Beach during the first seven months of this year than they handled over the same period in 2019.

The flood of imports has led to a logjam of vesselswaiting offshore for berth space that has persisted over the past year. The bottleneck has hovered at between 60 and 70 vessels this fall and reached a record 79 container ships on Thursday, according to the Marine Exchange of Southern California.

Sailing to alternative ports can add weeks to the time it takes to get goods from Asia to the U.S., however, and can pile on new costs and complications.

Rachel Rowell, a spokeswoman for freight middleman C.H. Robinson Worldwide Inc., said shifting the flow of goods requires container availability, space on a vessel, truck capacity and equipment including the chassis that attaches to trucks to allow them to carry containers. All of those may be in short supply.

“Shifting entire chains is a more challenging ordeal than a cab shifting which street it takes, which is why shifting ports is not often a preferred option and why it is difficult to do last-minute,” she said.

Freight forwarder Seko Logistics has chartered ships to Portland, Ore., and Jacksonville, Fla., for frustrated importers. Each time, the firm must lease sea containers for the voyage. It also has leased extra space in Portland to manage the boxes and spent weeks finding local trucking companies capable of moving the goods to distribution hubs in Ohio and California.

The efforts have brought shipping costs to as high as $20,000 per box, not far from the high rates in today’s spot container shipping markets.

Transferring cargo from containers to trucks isn’t ideal for importers like Jim Jones, senior manager of international logistics at RST Brands, a Salt Lake City-based furniture seller, that used the service. “The more times the product is touched the more times you have an opportunity for damage and for things to get lost,” he said.

Even so, Mr. Jones said that if supply-chain congestion continues to frustrate his attempts to import furniture he would use the service again.

ITS Logistics has moved truckers from Jacksonville, Fla., to Charleston, S.C., to serve shippers who wanted to avoid the Port of Savannah, Ga., after ships started backing up offshore in August and September. It has considered moving other drivers to Houston but doesn’t take such steps lightly.

“For the drivers and for us it is taxing,” said Paul Brashier, vice president of drayage and intermodal at ITS Logistics, based in Reno, Nev. “When you reposition folks hundreds of miles away and they’re used to running back and forth locally and they’re home every night that’s a definite challenge.”
Source: Wall Street Journal

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