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West Coast Ports Update

Dear Valued Customer,

As the West Coast Port congestion issues continue to wors-en, we want to keep you at the front of our minds. In addi-tion to LA/LB, the Pacific Northwest (SEA/TAC) is now strug-gling. It appears the ILWU labor is creating delays by not filling labor orders.

The situation in LA/LB has dominoed and ships are now ar-riving from Asia and anchoring in the harbor until a berth opens. This will cause a one to two day additional delay to the seven to 12 day delays we have been experiencing. At this point, the Ports of Vancouver and Prince Rupert in Canada are in fair shape.

Please keep in mind the following as you go about planning: • If importing cargo via the ports of Los Angeles and Long Beach, please expect between seven to 12 days of delays to the published transit time schedule.

• Exporting cargo through the West Coast is also be-coming problematic if export cargo is moving from an inland point in the US. This is due to the imbalance of rail cars moving east, lack of available car space at

in-land points and the inability of the railroads to quickly and efficiently move loaded import trains from West Coast marine terminals and rail depots to inland points. Please contact your local Crane Worldwide Logistics rep-resentative and ask us about solutions including moving cargo via US domestic ground service and transloading in California or Washington to an ocean container for exporting.

• Due to the prolonged, continuous congestion the West Coast ports have experienced over the past sev-eral months, we expect there will be sevsev-eral months of continued delays in getting back to normal operations while the marine terminals, Class 1 railroads, chassis operators and truckers clear the backlog of freight. We should begin to see moderate levels of improvement in early 2015 as volumes slow. Please contact your local Crane Worldwide Logistics representative and ask us about all-water services via alternate ports or sea & air combination solutions. These options can be particular-ly effective if cargo is time sensitive.

Sincerely, Tim Zubradt

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Twelve Reasons for LA-LB Port Congestion

Bill Mongelluzzo

1. Big Ships

Impact: The largest ships in the U.S. trades are calling in Southern California. Each vessel call generates 5,000 to more than 10,000 container moves during the several days a ship is in port, stressing berth, yard and gate operations. Solution: The big ships are here to stay. In fact, the vessels will keep getting bigger, so terminal operators must improve their productivity to handle the big ships.

2. Bigger Cargo Volumes

Impact: Cargo volumes at the port complex through Sep-tember are running 5 percent higher than the same nine-month period in 2013, despite a good deal of cargo diver-sion to other ports, and this unexpected growth is taxing the entire supply chain.

Solution: There will be a dip in volumes into December be-cause all of the holiday merchandise has entered the coun-try, but there will be another spike in January before the Chinese New Year. The entire supply chain must gear up for bigger volumes. This may necessitate the hiring and training of additional longshore labor and truckers.

3. Carrier Alliances

Impact: Alliance partners are spreading out their vessel calls over multiple terminals in Los Angeles-Long Beach — as many as five or six — creating a logistical nightmare for truckers and cargo interests attempting to match the right chassis with the right containers.

Solution: Carrier alliances are not going away, so the alli-ance partners must work closer together, beginning with the stowage of containers on vessels overseas. Alliance car-riers must cooperate with each other, and with terminals in Los Angeles-Long Beach, in planning which terminals will handle vessels when they arrive in port.

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4. Chassis Shortages

Impact: Chassis are scattered all over the harbor, in excess at some terminals and in deficit at others, making it ex-tremely difficult for truckers to have the right chassis when the drivers need them to match with the containers that must be moved.

Solution: Operators of the largest chassis pools in the har-bor have agreed to develop a gray chassis model, with roll-out promised for Feb. 1, 2015. Interoperability of chassis assets is crucial to resolving the equipment problem.

5. Gate Hours

Impact: Even though terminal operators in Los Angeles-Long Beach keep their gates open up to 10 shifts each week, long truck lines at the beginning of each shift and after lunch breaks indicate that continuous operations over 16 to 18 hours each day are necessary to prevent truck bunching. Solution: PierPass Inc. announced on Oct. 24 that most of the 13 terminals in the harbor were running an early flex

gate at 7 a.m. each morning, an evening flex gate from 5 p.m. to 6 p.m. and were adding staff to keep their gates open through the day lunch hour and evening dinner hour.

6. Labor Staffing

Impact: Congested marine terminals generate hundreds of extra container moves in the yards. Numbers posted on the Pacific Maritime Association website indicate employers are paying 20 percent more man-hours compared to last year even though cargo volumes in Los Angeles-Long Beach are up only 5 percent.

Solution: Extending gate hours, moving forward with the gray chassis concept and improving terminal productivity should eventually de-congest the terminals and reduce un-necessary container moves within the harbor.

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7. Safety Checks

Impact: The California Trucking Association this fall report-ed that ILWU mechanics, possibly in line with coastwide contract negotiations, launched a new policy of secondary safety checks on tractors, chassis and containers, causing unacceptably long turn times for truckers.

Solution: The Pacific Maritime Association and International Longshore and Warehouse Union must immediately come to agreement upon a new contract. The contract’s griev-ance machinery will then be in effect, and employers can seek timely arbitration when there is cause to believe frivo-lous safety checks are being required.

8. Hard-Timing TraPac

Impact: TraPac, which will be the first terminal in the har-bor to automate its operations, is resisting attempts by the ILWU to force the employer to accept manning require-ments TraPac says are unnecessary. Productivity at the ter-minal is way down.

Solution: This is a war of attrition to see which side wins and

sets a precedent for future automation on the West Coast. Once again, a coastwide labor contract will reinstitute the grievance machinery, and TraPac and the ILWU can seek ar-bitration to resolve the matter peacefully.

9. Truck Capacity

Impact: Federal hours of service restrictions and severe terminal congestion have stressed truck capacity in the harbor beyond its breaking point. Drayage companies are turning down pleas from importers to take on new business because the motor carriers don’t have enough capacity to handle their existing book of business.

Solution: The Harbor Trucking Association says there would be sufficient truck capacity if the terminals weren’t so con-gested. As an interim solution, a request to the government to temporarily extend the hours drivers can work might of-fer some measure of relief. Improved turn times at the ter-minals are crucial to attract more drivers to the harbor.

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10. Vessel Bunching

Impact: Big ships are being delayed at major gateways around the world because they take longer to be worked. When they reach Los Angeles-Long Beach, the terminals are assigning only two or three work gangs alongside the ships, rather than five or six, and are using most of the workforce to decongest the yards, further delaying the vessels.

Solution: Terminal operators around the world must devel-op processes to turn the big vessels in a timely fashion so the ships can be kept on schedule.

11. Demurrage and Per Diem

Impact: Marine terminals without prior notice are refusing to accept empty equipment, they are restricting the time for storing export loads, and they are closing sections of their facilities to truck traffic. This is causing a surge in late charges for the return of containers and chassis, and pro-cessing the paperwork that is involved is adding to the con-gestion problem.

Solution: Some industry sources say that until the

conges-tion problem is resolved, the ports and terminals should extend free time for equipment, but others say this policy would result in making congestion worse by reducing the sense of urgency for removing containers from the termi-nals.

12. Port Non-Productivity

Impact: Shipping company executives have stated, and The JOC Group Port Productivity database numbers confirm, that U.S. terminals lag their counterparts in Asia and Eu-rope in working today’s mega-ships, so the problems being experienced in Los Angeles-Long Beach today could easily spread to other U.S. ports in the near future.

Solution: Terminal operators must analyze existing work practices and work rules, borrowing best practices from world-class ports in Asia and Europe, to prepare U.S. ports for the eventual arrival of vessels with capacities up to 18,000 20-foot container units.

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Bill Mongelluzzo

Port congestion has gotten so bad in Los Angeles-Long Beach that harbor truckers are imposing congestion surcharges of $50 to as much as $100 an hour, and retailers and other beneficial cargo owners are paying the extra charges if the alternative is that they will not get their containers that day. Truckers say they have no choice but to charge customers for long waits caused by port congestion. Truckers lose thousands of dollars a week because trucks that sit idle in long lines outside terminals are not available to pull other loads. Drivers who normally would make four trips per day are averaging fewer than two because of the widespread congestion, trucking company executives said.

During past bouts with port congestion, trucking compa-nies attempted to charge BCOs for long wait times, but they weren’t successful. “Those times are changing,” said Fred Johring, president of Golden State Express and chairman of the Harbor Trucking Association of Southern California. Many importers will willingly pay wait times or surcharges if that is what it takes to get their containers, he said.

Many trucking companies in the past would attempt to col-lect a surcharge after drivers spent two hours in line, but some companies are now seeking a surcharge after one hour, Johring said. He outlined a typical scenario. When a driver has spent an hour or longer waiting in line at a ma-rine terminal, the company will contact the cargo interest and present the importer with two options: either agree to pay a specified surcharge for the driver to remain in line, or decline to pay the surcharge and the trucker will leave that terminal and go after another load.

This situation is not unique to Los Angeles-Long Beach. Truckers in New York-New Jersey levied surcharges earlier this year when the frigid winter weather caused long de-lays at terminals there. JOC.com reported in a Feb. 21, 2014, story that some truckers were charging $60 an hour after a three-hour wait at the terminals.

Port congestion has also had the effect of reducing truck capacity in Southern California. Trucking companies report

that every week they receive several requests from poten-tial new customers, but the drayage companies say they are struggling to meet the requirements of their steady custom-ers, so they must turn down the new business.

Exporters in Southern California are facing a different chal-lenge. Recently, some carriers have been notifying export-ers that the terminals are running out of space, and those terminals are limiting the number of days that they will ac-cept export loads to four days, or in some cases fewer. The ports’ tariffs allow export containers to be delivered to the terminals up to six days before the cut-off date without be-ing charged storage.

The Port of Los Angeles created a storm last month when it solicited shipper reaction to a proposal to reduce free time on exports to four days from six days. Peter Friedmann, ex-ecutive director of the Agriculture Transportation Coalition, said the proposal drew an immediate response from his members. “They are angry,” he said.

One ag shipper stated that port congestion in Southern Cal-ifornia is caused by the processing of imports, not exports. “Don’t penalize exporters for operators not being able to control their import traffic,” the shipper said. Some export-ers ship 100 or more containexport-ers on a single voyage. Their access to truck capacity requires that they spread out their shipments over five or six days, another ag shipper said. A spokesman at the Port of Los Angeles said the port “has no current plans to change free time.” A spokesman in Long Beach said that port has no plans to change free time for exports.

However, Long Beach had extended free time for imports to seven days from four days for the period Oct. 18 to Oct. 31. Importers had hoped the port would push the free-time extension into November because cargo volumes remain strong, but the port spokesman said Thursday the extension would end Oct. 31 as planned.

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Port Situation in Seattle/Tacoma

Please note that, as of this morning T-18 in Seattle has closed their gates for all transactions due to labor short-ages. It is rumored that WUT in Tacoma will follow suit shortly. Pierce County Terminal in Tacoma has stopped receiving for exports due to the terminal being at capacity.

T46 is not receiving exports at this time, either.

This is a very fluid and volatile situation, and is changing by the hour. As we receive more useful information, we will do our best to keep you updated.

Labor Slowdowns Cause Cargo Backlogs in Seattle, Tacoma Ports

Bill Mongelluzzo

Cargo backlogs at the ports of Seattle and Tacoma are mounting due to work slowdowns by the International Longshore and Warehouse Union, threatening vessel arriv-als scheduled for the weekend.

The work slowdowns, which employers say are tied to con-tract negotiations between the ILWU and the Pacific Mar-itime Association, began last Friday, intensified over the weekend and continued through Wednesday. Terminal op-erators say they have not been able to adequately work ves-sels since last week.

Port of Tacoma spokeswoman Tara Mattina said the con-tainer vessels in port on Wednesday began arriving last weekend, and several more container ships are scheduled to arrive this weekend.

“The ships are beginning to stack up,” she said.

The ILWU work slowdowns are causing extreme losses for harbor truckers who report gate moves have been reduced to a trickle. Jim Dutton, vice president of the Washington Trucking Association, said member companies send their trucks to the harbor each morning, a few lucky truckers are able to complete transactions, and the others are escorted out of the terminals and the gates are closed.

BNSF Railway confirmed on Tuesday that it was embargoing intermodal rail services from certain locations in the Mid-west to the Pacific NorthMid-west ports. If the trains get stuck there, they will not be available to serve customers in other locations, the railroad said.

PMA on Monday issued a statement accusing the ILWU of work slowdowns and refusing to dispatch skilled labor to handle cargo-handling equipment requiring certified oper-ators.

“In Tacoma, the ILWU is not filling orders for skilled workers, including straddle carrier operators, who are crucial to termi-nal operations,” PMA spokesman Wade Gates said. “This is like sending out a football team without the receivers or run-ning backs. You can’t run the plays without them,” he said.

PMA said the longshoremen who are reporting to work each day in Seattle and Tacoma have reduced container-handling productivity by 40 to 60 percent. The daily routine at the terminals this week has been for longshoremen to show up at the terminal for a work shift and operate slowly for about two hours. The employers then dismiss the workers and shut down the facilities until the next shift.

A bulletin that a shipping line sent at 1 p.m. Wednesday to its customers and vendors is representative of what cargo interests are used to receiving now: “The terminal has shut down for the rest of the day. Labor has been released. They will be ordering labor and trying again tomorrow.”

The Port of Seattle Wednesday issued a brief statement: “La-bor negotiations are affecting operations at our terminals. The situation remains dynamic at this time. We urge ship-pers to check with their shipping line and terminal operator for current status. The Port of Seattle hopes for a speedy resolution of the PMA/ILWU negotiations so that terminals can resume full operation and movement of goods.”

Several vessel arrivals are scheduled this weekend, although terminals must complete the work on the ships that are al-ready there in order to receive additional vessels. On a posi-tive note, Mattina said a car carrier that arrived on Wednes-day in Tacoma was being worked all Wednes-day, “albeit slower than we would like.”

Vessel operators do not have many options on the West Coast. Los Angeles-Long Beach has been crushed by con-gestion for weeks now. The Canadian ports of Prince Rupert and Vancouver are options, but are already grappling with overflow cargo from the U.S. ports.

The ILWU also engaged in slow-down tactics and excessive safety checks in Los Angeles-Long Beach Monday evening through Tuesday, the PMA reported. Conditions had im-proved somewhat on Wednesday, employers said.

PMA confirmed that coastwide contract negotiations re-sumed Wednesday in San Francisco after a hiatus of several days.

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North America Rail Operations

BNSF has advised they are limiting volumes ex Chicago, Denver, Minneapolis-St Paul, and Omaha en-route to Seat-tle and Tacoma terminals. This is due to the elevated termi-nal and online inventory headed to these destinations. As needed, alternative gateway routings will be put into place. Truck Power

• Truck Power across the USA to perform import store door deliveries and export door pickups continues to be a major concern. Our Operation colleagues continue to bring on new trucks.

• There are no truck power issues in Canada and Mex-ico.

• Please see our Truck Power Map on OOCL.com for more information regarding advance timing required for door movements.

Vessel/Loop Deployment Changes

• As advised in last week’s newsletter, the members of the G6 Alliance have announced the temporary suspen-sion of the Central China (CC2) service between Asia and the U S West Coast until further notice. The last sailing for CC2 will be OOCL Italy departing from Shanghai on October 31. All ports called by CC2 will be covered by other G6 Alliance services and our Service Route maps have been updated accordingly.

Pacific Southwest

Many of the Southern California marine terminals remain highly congested, although there are a few notable excep-tions such as Long Beach Container Terminal (LBCT). How-ever, even with the most highly congested facilities, the day-side or 1st shift gates remain fluid with relatively short truck queues and light yard traffic. Importers are encouraged to pick up during the 1st shift whenever possible as the trans-action time is typically much shorter than the 2nd shift or pier pass gates.

Long Beach Container Terminal (LBCT)

• Overall, OOCL dwell time remains low at LBCT. • On most days, motor carriers may expect the follow-ing when visitfollow-ing LBCT:

o Healthy supply of 40’ bare chassis o Reasonable gate queues and turn times o Consistent weekly gate schedules o Adequate sufficiency of manning

• LBCT continues to offer additional Friday evening gates.

Global Gateway South (GGS) Terminal

• GGS has converted back to a grounded operation for import delivery.

• GGS has changed the rules on the appointment sys-tem and they are now instructing motor carriers to re-schedule any missed appointments.

Pacific Container Terminal (PCT)

• Due to congestion the terminal is moving all custom cleared 40’ import local and store door delivery con-tainers to an off dock depot facility (Shippers Transport) where it will remain on wheels for pick up. It may take up to three days to be transferred to the off dock facil-ity. Importers are encouraged to monitor the SSA web-site for availability which will specify if the cargo is on terminal or at the off dock depot.

TraPac

• Terminal productivity and chassis supply continue to improve.

Yusen Terminals Inc. (YTI)

• Yard congestion and chassis shortages continue pro-longing turn times and resulting in on dock rail delays. • The congestion has forced YTI to slow import dis-charge from current working vessels which, in turn, has led to berth congestion and delayed vessel arrival.

Chassis

• The chassis shortage seems to be easing a bit as many terminals are now starting the day with bare chassis. • Dispatchers should contact the GACP to determine chassis supply and to identify alternative pick up loca-tions if required.

USA Midwest & South Central

• St Paul and Houston are all experiencing high vol-ume and the BNSF is asking that containers out-gate as quickly as possible to alleviate congestion at the ramps. • COCP Chassis Pool (Chicago & Midwest locations) has reached stress levels for 40’ & 45’.

• The DCCP (Denver Chassis Pool) is short of chassis and many import loads have been grounded at rail termi-nals. DCCP is also not releasing bare chassis for export shipments.

Oakland, Tacoma & Seattle

• Oakland – OICT chassis inventory is adequate.

OICT will run a night gate on Nov.5th from 6pm- 3am for exports and empties in, empties out, and import de-liveries at a cost of $50 per transaction that will be in-voiced directly to the motor carrier doing the move; this

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is coordinated directly by OICT mgmt and the trucker. • Tacoma – Washington United Terminal (WUT) remains congested due to import loads dwelling caused by on-going rail car shortages.

Vancouver

• Intermodal operations at both DeltaPort and Centerm Terminals are reported as normal.

CN Montreal

• The CN had adequate cars on hand or enroute to evacuate the current intermodal containers at both CAST and Termont Terminals.

New York Terminals

• All NYC marine terminals will be open on Election Day (Nov 4th) with the exception of Global Container Termi-nal (GCT) New York.

Norfolk International Terminal

• Norfolk International Terminals (NIT) has extended the peak season operating hours for this weekend. NIT will be open on 11/8 from 7:00 a.m. – 12:00 noon. • Norfolk marine terminals will be open on Election Day (Nov 4th).

• The Empty Return Policy Matrix will be moved from the http://www.vit.org website to the http://track.por-tofvirginia.com website on Wednesday, November 5th.

South Atlantic

• Intermodal operations in the region are reported as normal.

Mexico

• Trucking services and Rail services are normal.

References

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