CSCMP's Supply Chain Quarterly
January 21, 2019
Forward Thinking

How the maritime industry can compete in the age of Amazon

Port of Long Beach head says ecosystem must adopt "24/7 thinking" and a range of operational improvements to meet businesses' need for speed.

Because e-commerce is most closely associated with express, air, and truck transportation, maritime industry players may think e-commerce doesn't affect them. Port of Long Beach Executive Director Mario Cordero believes that would be a mistake.

E-commerce has created an "Amazon state of mind" pushing companies to speed up their supply chains. This, in turn, will put increasing pressure on port authorities, ocean carriers, and terminal operators to make their own operations faster and more efficient, Cordero, former chairman of the Federal Maritime Commission (FMC), said last week in keynoting the 22nd Annual Northeast Trade and Transportation Conference in Newport, R.I. The conference is produced by the Coalition of New England Companies for Trade (CONECT).

The maritime industry has not kept pace with the rapid technological advancements that have brought profound change to virtually every industry, Cordero said. Gone are the days when an ocean carrier or a terminal operator could tell customers to "give us a little more time" to make a container available for pickup or to process a truck through a gate, he said.

Ocean carriers have long expected ports to load and unload ships 24/7, Cordero noted, but the question now is "whether we can extend '24/7 thinking' to the gate, to truckers," and all the way out to the shippers and warehouses that want to load and unload containers around the clock.

The ports of Los Angeles and Long Beach, which make up the nation's busiest port complex, have become more efficient, Cordero said, citing as evidence the record volumes of containers passing through the ports without delays. However, there are areas where U.S. ports and terminal operators could take steps to speed up their operations. These include:

Improving truck turn times. Cordero termed it "unacceptable" that trucks should have to wait outside gates for hours. "This is something we must fix sooner rather than later," he said.

Later gate hours. If justified by the volumes, extended hours for processing containers could make sense at many ports. Cordero expressed optimism that "once [importers and exporters] have confidence that you'll be open, they will come."

Efficient chassis management. A "completely neutral model" with appropriate technology for managing chassis is necessary. Without that, Cordero said, the ability to optimize chassis management and availability is compromised.

Reduction in container dwell times. Long dwell times—the period from when a container is discharged from a ship to the time it is picked up by the importer—are indicative of inefficiencies that are costly for ports and shippers alike. The Port of Long Beach reduced dwell time by 27 percent in 2017, and improved even further in the first two months of 2018, Cordero noted.

Shared information portals. The Port of Los Angeles has been working with General Electric Co. on a system where ports, terminals, ocean and motor carriers, and cargo owners could share data that would improve supply chain visibility. Long Beach is conducting a similar pilot with three of its terminals, Cordero said. The FMC has recommended the development of a national information portal to improve port efficiency and reduce congestion.

A uniform truck appointment system. Currently in Southern California there are nine different appointment systems, Cordero said. A uniform system would introduce efficiencies and make it faster and easier for drayage carriers to conduct business at container terminals.

Contributing Editor Toby Gooley is a freelance writer and editor specializing in supply chain, logistics, material handling, and international trade. She previously was Editor at CSCMP's Supply Chain Quarterly. and Senior Editor of SCQ's sister publication, DC VELOCITY. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.

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