Date: 25th April 2022
High import volumes being diverted from the West Coast is putting renewed pressure on marine terminals at the Port of New York and New Jersey and forcing additional limits on intermodal truckers for returning empty containers to the port.
As a result of the high volumes, two marine terminals are considering new rules that match import containers with empty ones. But motor carriers say that alone won’t work as there are already hundreds more empties that need to be removed before they can handle more import retrievals.
Instead, truckers say longer operating hours are now needed to deal with current volumes at marine terminals. Likewise, it’s up to ocean carriers themselves to perform more of the double moves of removing empties when dropping off imports.
The issue came to a head as seven ocean carriers — CMA CGM, Hapag-Lloyd, Ocean Network Express (ONE), Overseas Orient Container Line (OOCL), HMM, Yang Ming, and Wan Hai Lines — sent notices to New Jersey motor carriers blocking returns of various types of empty containers on various days during the week of April 18-22.
Two motor carrier executives told JOC.com the number of empty lockouts last week was unprecedented and demonstrates how squeezed the marine terminals are for space.
“It’s one thing when one or two carriers lock out empty returns,” Vice President of H&M Intermodal Services, said. “But when seven get closed out, that really makes it more difficult for us.”
CMA CGM waives per-diem
The episode was also atypical given CMA CGM’s involvement because truckers have rarely reported any issues with one of the largest carriers serving New York and New Jersey. However, in late March, port truckers said CMA CGM unexpectedly directed them to a distant off-dock storage yard to return empty containers.
The March episode, as well as last week’s, involved an unknown number of containers. But one motor carrier respondent to a recent poll by intermodal trucking group Association of Bi-State Motor Carriers said they are holding 50 CMA CGM empty containers on their own.
As part of the Ocean Alliance, CMA CGM has five services from Northeast and Southeast Asia into New York and New Jersey, utilizing the largest vessels that call the port. It also has two Indian subcontinent services.
CMA CGM said in a statement the return lockouts affected a narrow segment of its containers and only occurred on one day. The carrier also said it is proactively waiving per-diem fees for truckers to offset costs for storing empty containers and adding berth and storage capacity to relieve the crunch.
CMA CGM has stepped up by using two terminals and a container yard to better facilitate the flow of containers through the Port of New York and New Jersey. CMA CGM pursues any opportunity it can to protect the customer through a time of unprecedented supply-chain conditions.
Asia shift to East Coast
More volumes are hitting New York and New Jersey due to the shift of Asian freight away from the US West Coast ahead of labor negotiations between the International Longshore and Warehouse Union and marine terminal employers. Data from PIERS, a sister company of JOC.com, shows that Asian imports into New York-New Jersey grew 9 percent year on year in the first quarter of 2022. In contrast, the port of Long Beach saw Asian imports drop 3 percent over the same time.
More is on the way. It is indicated that East Coast bookings for almost all vessel services from Asia are full through at least May.
More freight is coming from the West Coast because of [the upcoming contract talks] but also concerned about more COVID-19 lockdowns.
Empty return lockouts ebb and flow between carriers and terminals, but the problem got worse in April.
In addition to the terminal lockouts last week, empty returns were blocked on five of the other 11 regular working days in April, data from the Association of Bi-State Motor Carriers show. Some New York-New Jersey marine terminals were open on Good Friday, typically a holiday for longshore workers, so they could clear out imports.
Terminals want match backs on boxes
Due to the import surge, two of the port’s largest marine terminals, Maher and Port Newark Container Terminal, proposed the match-back rule for imports and empties at a meeting last week with intermodal truckers, according to several sources. The start and duration of the rule were not immediately available.
Neither terminal responded to requests for comment about the proposed rule.
Another terminal, GCT New York in Staten Island, has periodically used a similar rule recently as it’s also dealing with high import and empties volumes.
That type of restriction limits driver efficiency. H&M has customers that use multiple ocean carriers at different terminals, so it needs to free an empty off a chassis at one terminal to retrieve an import at another.
Carriers can block empty returns at the last minute, and inconsistent vessel schedules also make it a challenge to match empties and imports. If a trucker has no empty box to return to that terminal, then the import container can then accrue per diem charges.
The steamship line will end up waiving the per diem if, and when they are being challenged.
NY-NJ truckers holding over 1,200 empties
A poll from Bi-State showed that 48 motor carriers that responded said they are holding about 1,190 empty ocean containers on their own each day due to having no return location.
Different operating procedures from one terminal to the next add to the difficulties in returning empties. Several ocean carriers that call New York-New Jersey alternate arrivals between marine terminals that require truck appointments and those that don’t.
If an appointment is not available at a terminal, then a motor carrier can’t return an empty but per diem can still be charged. Hapag-Lloyd was hit with a US government fine last week for charging per diem despite knowing that empty return appointments weren’t available.
In other instances, terminals that don’t require appointments are not a panacea, either. When empty returns are allowed, those terminals can easily be overwhelmed by the container backlogs that truckers are sitting on, resulting in hours-long waits outside the terminal’s gate and more productivity loss.
Other times, per diem rules can be unclear. An ocean carrier may announce late in the day they can take returns at a particular site, but the question then becomes whether the earlier part of the day is included in the free time allowed before per diem begins.
There’s no clarity from ocean carriers on waiving per diem.
The New York-New Jersey terminals have added an hour or two to operating hours and offered Saturday gates to help move imports and empties. But a true evening shift is what’s needed to clear out imports and return empties. Greater consistency in other ways such as appointments and gate procedures at the marine terminals would also help.
Southern California marine terminals have been trying longer hours to mixed success. It is understood that warehouses and other parts of the supply chain will need to adjust, but marine terminals need to take that first step for others to follow.
We are three, four, five years ahead of where we thought we would be in terms of freight but the operating schedules have not changed.
In addition, it was important for ocean carriers to know the toll empty containers take on landside logistics and move more of them out of ports entirely. Containerization has changed dramatically and needs a deep rethinking.
It is used to know where the empties went back every day, it was all one type of equipment, and everything was on wheels but everything has gotten so complicated. Nowadays, need to figure out where empties go back.”