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Port Congestion and Drayage Efficiency

Port Congestion and Drayage Efficiency

Authors Philip Davies, Principal, Davies Transportation Consulting Inc. and Michael E Kieran Transportation Consulting Principal IBI Group presented a paper on “Port Congestion and Drayage Efficiency” at the 2015 METRANS International Urban Freight Conference. Their paper highlights research on the impact of “densification” of port container terminals on the drayage sector and the short and long-term responses of the logistics system to higher drayage costs.

Port congestion and drayage efficiency issues re-emerged as major challenges for U.S. container ports with the recovery of container traffic to previous peaks. The deployment of ever larger container vessels results in “bunching” of traffic at marine terminals. Resolution of terminal and road congestion problems is complicated by the reluctance of terminal operators to extend truck gate hours. Changes in container chassis logistics have had a major impact on drayage efficiency.  Mike Kieran noted, “without proactive management, drayage inefficiency is an inevitable consequence of increasing port throughout density”.

Similar problems were encountered much earlier at the Port of Vancouver. Port Metro Vancouver’s container terminals currently achieve a throughput per acre approaching 8,000 TEU’s per acre, approximately 70% higher than the average for Southern California ports. Maintaining fluidity of terminal operations with these higher throughput levels required significant changes to terminal operations, including the displacement of non-essential activities to off-dock sites and implementation of technology including truck reservation systems.

These increased drayage costs provided the motivation for rationalization of container logistics in BC’s Lower Mainland. These efforts have included cooperation among import and export shippers to expand the use of “triangulation” to reduce empty truck trips, and deployment of container-handling equipment at both import distribution and export transload warehouses to increase the efficiency of chassis utilization and throughput on firms’ limited land base.

Clustering of Container Facilities

One strategy for reducing drayage costs is the clustering of container facilities nearby. The prime example of this in the Lower Mainland is the development of Port Metro Vancouver’s Richmond Logistics Centre on approximately 500 acres of land assembled by the Fraser River Port Authority from a former landfill site.  The site is ideally suited for container logistics midway between Inner Harbour terminals (Centerm and Vanterm) to the north and Deltaport to the south. Development was kick-started by a joint venture called Modalink between the Fraser River Port Authority and the Vancouver Port Authority (amalgamated as Port Metro Vancouver in 2008) which resulted in the construction of the Coast 2000 combined export transload facility and empty container storage yard on the bank of the Fraser River in 2004. The site is almost entirely built out now, with a mix of import, export and other logistics operators, rail service by CN Rail, and a barge ramp at Coast 2000 for handling pulp shipments. Port Metro Vancouver divested their interest in the Modalink joint venture to the private sector in 2012.

The availability of empty container storage at the site is the key to improving the efficiency of drayage trip patterns because it facilitates the repositioning of empty containers among importers, exporters and storage without leaving the site. It will be difficult to replicate this development within the Lower Mainland due to the lack of sufficiently large industrial land parcels.

Densification of Warehouse Facilities 

The move to off-dock storage initially resulted in rapid increases in traffic at off-dock storage yards. However, over the longer term demand for dedicated storage yards has declined as both import and export transload facilities began to stack and store containers on-site. Some facilities have combined all three functions at a single site (transloading imports, transloading exports, and storing empty and loaded containers). This provided some benefits:

• Reduces truck trips, travel times, and drayage costs by reducing empty hauls.

• Enables more efficient use of the drayage chassis fleet.

• Increases logistics facility throughput capacity and flexibility for complying with the marine terminal reservation systems.

• Provides a cost effective alternative for shipping lines to meet their off-dock storage and equipment maintenance requirements and still provide the necessary level of customer service.

A prime example of this strategy is the development of a cross-dock facility on Port Metro Vancouver land in the city of New Westminster. It was originally developed by Damco to accommodate Target’s import traffic in their short-lived foray into the Canadian market and is currently handling large quantities of import containers for Canadian Tire, an important retailer. The facility is designed to transload imports from international containers (primarily 40-foot containers) into 53-foot domestic containers for further shipment by rail. The service achieves high throughput on a relatively small footprint by stacking marine containers onsite. The building is only 43,000 square feet on an 11-acre site for a Floor/Site Ratio (FSR) of only .11, compared to approximately .35 for more conventional import distribution centres in the Lower Mainland.

Conclusions

In the Lower Mainland, densification of port terminal operations in the Lower Mainland has resulted in the densification of operations at import and export transload facilities to offset additional drayage costs. This results in additional capital and operating costs for onsite container handling equipment, and potentially for the strengthening of yard pavements to cope with the dynamic and static loads of equipment and container stacks.

Beneficial cargo owners, drayage firms and logistics operators have had more than a decade to adjust to changes resulting from increased density of operations at the container terminals. The successful adjustments consisted primarily of investments to capitalize on the potential benefits from more efficient trip patterns including triangulation. Phil Davies remarked, “collaborative approaches are extremely limited in their ability to resolve drayage issues.”

In the Port Metro Vancouver context, the adjustment has been made harder by a chronic shortage of suitable industrial land in the Lower Mainland, and the consequent high prices for industrial real estate. Davies stated, “longer term strategies involve complementary densification of operations at off-dock facilities along with adoption of technologies to enhance terminal productivity”.