SoCal Port of Entry Insight – February 2019

Providing insights into the Ports of Long Beach & Los Angeles Region Goods Movement Dynamics

DRAYAGE OPERATIONS

• CA State – SB1402 Labor Contracting: Customer Liability (effective 1-1-19) – A new CA law will hold companies contracting with Drayage Carriers liable for unpaid judgments against Carriers due to driver misclassification (as independent contractors/owner-operators) for driver claims against their employers, including unpaid wages, unlawful expenses, payroll taxes, workman’s comp., etc. plus penalties and interest. The CEO of the Harbor Trucking Association predicts the law to be challenged in the Courts and eventually overturned.
• Drayage Driver Challenge – The trend for senior drayage drivers (50 to 60 years old) to leave the industry continues to be a serious challenge with a smaller number of new drivers coming into the industry. SUGGESTION: Talk with your drayage partner(s) to better understand their strategies to retain and recruit drivers.

MARINE TERMINALS

• Additional Marine Terminal Automation – APM Terminals (Maersk Line) has recently announced tentative plans to automate 100 acres of the 440-acre APM Terminal at the Port of Los Angele. ILWU has stated that they will fight the plan. The 2002 ILWU contract opened the door for the use of technology and the 2008 contract specifically permits the use of automated cargo-handling equipment.
• LBCT to Finish Final Phase – Long Beach Container Terminal’s (LBCT) automated facility is expected to finish the final phase of its project by 2020. It will have an annual throughput capacity of about 3 million TEU.
• PierPass Mitigation Fee Change – On Monday, Nov. 19, 2018, the PierPass Traffic Mitigation Fee (TMF) was changed to $31.52 per 20-foot container and $63.04 for all other sizes of containers. The TMF will be applicable on all shifts, all days. Appointments are required on all shipments. The new program was designed to reduce truck congestion and delays.
• PMSA Identified Longer Dwell Times – Pacific Merchant Shipping Association (PMSA) has been reporting dwell time since May 2016. In that time, average dwell time only exceeded 3 days twice, back in 2016. The percent of containers remaining on-dock for more than 5 days averaged around 6% and has never been double digits. From October to December, the percent of containers remaining on-dock for more than 5 days was 11% or greater, peaking in November at 13.9%. As more cargo came ahead of the tariff deadline than was being consumed on retail shelves or on production lines, the supply chain turned into a storage chain.

PORTS

• GE Optimizer System Project – Currently BCOs and other stakeholders use multiple marine terminal I.T. platforms to check container availability and other information. This is a cumbersome system the way it works today. Both the Ports of Long Beach & Los Angeles are involved in the GE Port Optimizer System Project, which will provide a single-source platform which is designed to enhance cargo flow as participating terminal operators and other stakeholders receive much improved advance notice of cargo arrival. Key to project success is widespread participation across goods movement stakeholders.

THIRD-PARTY LOGISTICS PROVIDERS

• SoCal Based 3PL Acquisitions – IMC Cos. improved its Southern California presence when it acquired Progressive Transportation Services in 2016 for an undisclosed sum. California Cartage Company, the largest drayage firm at the Ports of Long Beach & Los Angeles was purchased by NFI in October 2017. Southern Counties Express was purchased by Universal Logistics for $65 million in August 2018.
• Port of Los Angeles Warehouse – NFI/California Cartage Company will not have the option to renew the lease on the Port of Los Angeles Wilmington warehouse and yard facility which California Cartage has operated at for over 40 years.
• Maersk Increases 3PL Capabilities – The A.P. Moller-Maersk subsidiary Damco has leased in May 2018 a nearly 1 million-square-foot warehouse complex in Santa Fe Springs, Calif., from Goodman Group. Damco signed a 10-year lease for 989,809 square feet spread across six buildings set on 75 acres, including 18 acres of trailer parking. The facility is located about 20 miles northeast of the Ports of Los Angeles and Long Beach.

If you would like to discuss the SoCal port of entry or other logistics needs please contact: