Recent spikes in import volumes have led to another chassis shortage in the ports of Los Angeles and Long Beach. Many industry insiders are citing lengthy dwell times at regional warehouses and the resulting equipment dislocations as the root of these shortages rather than a lack of chassis availability. While these issues should ease up as imports start to fall, they will inevitably reemerge later whenever demand strays from expectations.
For example, outside factors like last year’s trade war tariffs or general seasonal influences play a huge role in how demand fluctuates from anticipated averages. Once demand varies, these container terminals are left ill-prepared to keep up with the actual needs of shippers and carriers. When dwell times at manufacturing plants and warehouses grow, equipment remains out of circulation, creating a chassis imbalance that significantly impacts the efficiency of cargo flow.
According to JOC, dwell times should fall under four days for ports in Southern California to sufficiently meet equipment needs, but at the height of the LA—LB chassis shortage, dwell times averaged longer than five days. To further complicate things, when trucking companies can’t get appointments that allow them to book dual transactions, or terminals enforce excessive regulations on returning empty containers, this chassis dislocation becomes even more unmanageable.
In total, there are three major Intermodal Equipment Providers, or IEPs, that operate about 60 to 65 percent of the available chassis for the entire area, which equates to 62,000 individual units. Thirteen percent of that inventory, however, is classified as “bad-order equipment” and requires maintenance before they can place the equipment back into circulation. Even though these IEPs are responsible for the majority of available chassis, they tend to have relatively slow response rates to equipment imbalances, reacting only when volumes have already decreased.
There are not only chassis shortages, but also labor limitations as well at America’s largest port complex. With no one to work the vessels at the docks and not enough equipment to handle the daily cargo volume, the ports are experiencing some pretty intense congestion. Some companies are coping by increasing surcharges for less-than-container-load cargo, and others are unwilling to waive demurrage fees for the delays created by rising dwell times.
All of these problems are not just contained to the LA—LB ports either. Based on recent data, import volumes from Asia also increased by 20 percent between June and July at the Port of New York and New Jersey. Now, the second most important gateway in the U.S. is similarly facing tighter chassis supply in addition to less warehousing capacity. While some of these shortages were caused by Tropical Storm Isaias, the decline in blank sailings has contributed a lot to this jump in imports, and with only eight blank sailings expected for September, chassis imbalances may only get worse.
It’s crucial for companies moving forward in these areas to strategically prepare for rising chassis supply and labor pressures. Click here to learn more about how O’Neill Logistics can help your company effectively manage your pier drayage needs.