Facing an unprecedented surge, where do ports and container lines go from here?
As the economy recovers from the pandemic, consumers are buying, businesses are reopening, and maritime operators are in a titanic struggle to process record-breaking cargo volumes. Next up: peak season.
Gary Frantz is a contributing editor for DC Velocity and its sister publication CSCMP's Supply Chain Quarterly, and a veteran communications executive with more than 30 years of experience in the transportation and logistics industries. He's served as communications director and strategic media relations counselor for companies including XPO Logistics, Con-way, Menlo Logistics, GT Nexus, Circle International Group, and Consolidated Freightways. Gary is currently principal of GNF Communications LLC, a consultancy providing freelance writing, editorial and media strategy services. He's a proud graduate of the Journalism program at California State University–Chico.
Maritime players, from containership lines to port operators, drayage truckers, third-party logistics companies, warehouse operators, and even inland U.S. intermodal rail services, found the first half of 2021 to be a titanic struggle as an overwhelming and sustained surge of ocean cargo threw transportation networks and supply chains into disarray.
Ports became jammed as they processed record container volumes. At one point earlier this year, the ports of Long Beach and Los Angeles had in excess of 35 ships at anchor in San Pedro Bay, waiting for a berth. Turn times for drayage operators to move containers out of ports, once typically 24–48 hours, stretched out to seven days or more. Warehouses, already chock full of goods, began holding onto loaded containers on their chassis far beyond the contracted “free time,” parking them on-site or nearby until warehouse space became available—and exacerbating an already acute shortage of empty containers and chassis available for return.
Then, the giant Ever Given containership decided to go sideways in the Suez Canal, blocking hundreds of ships and delaying tens of thousands of containers loaded with all manner of goods. That created a backlog that took weeks to clear and caused a ripple effect from Shanghai to Rotterdam.
And Murphy’s Law wasn’t done yet.
In late May and June, the Port of Yantian—China’s largest and the gateway to the Pearl River Delta manufacturing center—suffered a renewed surge of Covid-19 cases. That closed the facility’s west port operations and caused the east port to scale back to 30% of capacity. And while the port resumed full operations near the end of June, the ensuing pileup of ships and containers disrupted supply chains from China to the U.S. to Europe.
“It’s been a buildup of one problem on top of another, and then the wheels truly came off the carriage,” observes Lars Jensen, CEO of the research and consulting firm Vespucci Maritime (formerly SeaIntelligence Consulting). He describes a convergence of unprecedented operational and economic developments creating bottlenecks around the globe—which he projects will take months to clean up. “It’s a game of musical chairs. There is not enough capacity in the world to move all the cargo people want to move. That’s why rates have skyrocketed. There is no short-term respite in sight.”
John Janson is senior director of global logistics for SanMar Corp., an Issaquah, Washington-based supplier of wholesale apparel, bags, and caps. A top 100 U.S importer, SanMar books thousands of import container shipments annually and operates some eight major distribution centers in the U.S.
“We have never worked so hard to get the bookings we have or paid so much for those bookings—ever,” says Janson, a three-decade logistics veteran. “And while you would expect to get capacity when you’re paying the kind of rates out there today, that’s just not the case,” he observes, adding that despite offering more money and longer contracts, his ocean carriers still are not living up to their “MQCs” or minimum quantity commitments.
All that has caused him to look for alternatives—and get creative. Most of his Asia-origin ocean cargo comes into the Pacific Northwest. Working with freight forwarder Ceva Logistics, he found a bulk cargo vessel calling on Longview, Washington, that had extra space available. Through the forwarder, he was able to book 20 containers on that ship. “In this case, Ceva and [ship operator] CMA CGM put together a very creative solution,” he notes.
Whether it’s booking space with container lines, helping suppliers obtain empty containers at origin, persistent port congestion, finding truckers and securing drayage resources, and even getting slots on eastbound intermodal trains out of the Pacific Northwest, “never in my career have I seen all facets of transportation under this kind of pressure at one time,” Janson says. “We have always tried to be a shipper of choice and a good steward of the carrier’s assets,” he adds. “That [helps make] us a desirable customer. We continue to play that card as much as we can.”
It’s not just the wholesalers; the nation’s retailers are feeling the heat as well—and raising the alarm. In a June 14 letter to President Joseph R. Biden, National Retail Federation (NRF) President and CEO Matthew W. Shay wrote: “The supply chain disruption issues, especially the congestion affecting our key maritime ports, are causing significant challenges for America’s retailers. The … issues have not only added days and weeks to our supply chain but have led to inventory shortages.”
In his letter, Shay also warned of the economic consequences of the disruptions, noting that all of the respondents to a recent NRF member survey had experienced cost increases, with a majority (75%) saying they would pass along some of the costs to consumers.
PULLING OUT ALL THE STOPS
Meanwhile, the nation’s ports are pulling out all the stops to get record volumes of freight off ships, onto trucks and trains, and out to shippers.
“In the month of May, we processed more than 1 million TEUs (20-foot equivalent units)—an all-time record for any port in the Western Hemisphere,” says Gene Seroka, executive director for the Port of Los Angeles. The port in June was welcoming 15 container vessels a day, up from a pre-pandemic average of 10. He cites vessel productivity up 50% from pre-Covid levels—well above any previous measure. “Throughput is the highest it’s ever been,” he notes.
Congestion remains an issue, with dwell times in some cases increasing two- and threefold. He implores the Southern California import community to pick up their containers in timely fashion—and promptly return the empties and their chassis. “If there is no room on the ground because [shippers] cannot move containers out [to warehouses], that’s how ships sit. It’s all intertwined,” Seroka says.
NEW YORK STATE OF MIND
In Beth Rooney’s 29 years in the maritime business, she’s seen just about everything. Until this year. “We are 17% YTD over 2019, and that was a record year,” notes the deputy director of the port department for The Port Authority of New York & New Jersey. “If you annualize what we have done over the last four months [February–May of 2021], that’s what we projected [to be handling] for 2026–27—five years down the line.”
Nevertheless, the port and its partners have stepped up, Rooney says. “We have not had any backup of ships at anchor waiting to get into the port. Average time at anchorage has been less than a day.”
On the land side, the issues have primarily been with empty containers—and getting them back. Ideally, the port wants truckers to do a “drop and pick,” which is dropping off an empty or export container and picking up a loaded container before leaving—a “double move” at the same terminal. Or a live load, where they come in with an empty chassis, get a container loaded, and depart.
But that doesn’t always happen. Too often, the trucker drops a load at one terminal but doesn’t have another to pick up. With the advent of ship alliances, the ship line might want the trucker to pick up a container at Terminal A and drop off the empty at Terminal C. Or, the trucker has no on-port pickup and has to return to the warehouse with an empty chassis and get another empty or export box.
“So trucker productivity is down. Then there are times when the ocean carrier says, ‘I really don’t have anyplace for you to bring that empty, keep it for a day,’” Rooney explains. “Now, the trucker has no place to bring it, does not have a set of wheels to get another container because the empty it was going to return still has the wheels on it.” All of that increases dwell time and hampers both port throughput and the number of efficient moves a trucker can do in a day. And it presents a huge area for improvement.
Two other issues she cites are vessel schedule reliability and longer dwell times for intermodal cars in Chicago. “That’s limited how many Chicago boxes we can send in a day,” whereas “off-schedule ships lead to vessel bunching and delays everywhere in the supply chain.”
“We’ve had our challenges and we own those challenges,” she says, noting that through all the pressure and turmoil of the past year, she’s extremely proud of how the NY-NJ port community has come together and risen to the challenges.
UNPRECEDENTED VOLUMES
It’s a similar story over at the Port of Long Beach. Executive Director Mario Cordero notes that the port’s recent infrastructure improvements have paid dividends and made the port “big ship ready,” able to accommodate and efficiently process the largest 19,000-plus TEU vessels. However, the surging volume through 2021 “is beyond anything we may have forecasted. Never in our lifetime have we experienced the disruption we’ve seen in the past couple of years,” he notes.
Like Rooney, Cordero says that one of the biggest impediments to improving cargo flow—that is, getting containers off ships and out of the port efficiently—is a lack of equipment, specifically railcars, due to congestion and delay issues major rail providers are experiencing in Chicago. “Rail movement at the Port of Long Beach is a priority, and any time they [rail operators] don’t have railcars available to move containers inland, that becomes problematic.”
The congestion issues in Chicago have become so acute, that in mid-July, the Union Pacific Railroad temporarily suspended all of its intermodal train service from the four West Coast ports of Los Angeles, Long Beach, Oakland, and Tacoma into Chicago in an effort to relieve the backlog of boxes at Chicago-area terminals. The Burlington Northern Santa Fe Railway took similar action, essentially “rationing” space temporarily on eastbound intermodal trains from Los Angeles and Long Beach into Chicago, citing the surge of incoming boxes at destination, and challenges from congestion and processing delays.
The good news, Cordero says, is that the port’s metrics overall are improving, in dwell and truck times, and in ships at anchor. In late June, the port “had 13 vessels at anchor, much improved from months back when we had 30, 40 ships at anchor.”
MEANWHILE, BACK AT SEA …
As for the vessels themselves, maritime operators are still struggling to deal with the “surge of 2021,” notes Tom Donahue, executive vice president and CEO of U.S. operations for freight forwarder Aeronet Worldwide. The problem lies not so much with the fleets themselves as with port operations, he explains. After widespread sailing cancellations last year when cargo volumes fell off the deep end, all ships are now back in play, he says. But bunching at ports and congestion within them is severely delaying containers from reaching consignees, sometimes for days or weeks, he notes.
“[Vessel] service is terrible; transit time is a mess,” Donahue says. “Vessels used to be unloaded in 24–48 hours. Now, the average nationwide is three to five days to get a ship unloaded and out of the port.”
As peak season kicks into full gear, shippers have to lock up capacity now or risk their goods sitting on the dock, notes Donahue. His advice for shippers: Make sure your forecasts are accurate. Get them to your logistics provider as early as possible. If you want your goods to arrive in October, go back six weeks and get your bookings in place then. “And expect to pay more than you ever have before. A container from Asia was $1,500 a year ago. Now, China to the West Coast, all in, is hitting $10,000 or more.”
What happens when your warehouse technology upgrade turns into a complete process overhaul? That may sound like a headache to some, but for leaders at paper crafting company Stampin’ Up! it’s been a golden opportunity—especially when it comes to boosting productivity. The Utah-based direct marketing company has increased its average pick rate by more than 70% in the past year and a half. And it’s all due to a warehouse management system (WMS) implementation that opened the door to process changes and new technologies that are speeding its high-velocity, high-SKU (stock-keeping unit) order fulfillment operations.
The bottom line: Stampin’ Up! is filling orders faster than ever before, with less manpower, since it shifted to an easy-to-use voice picking system that makes adapting to seasonal product changes and promotions a piece of cake. Here’s how.
FACING UP TO CHANGE
Stampin’ Up!’s business increased rapidly in 2020, when pandemic-era lockdowns sparked a surge in online orders for its crafting and scrapbooking supplies—everything from rubber stamps to specialty papers, ink, and embellishments needed for home-based projects. At around the same time, company leaders learned that the WMS in use at its main distribution center (DC) in Riverton, Utah, was nearing its end-of-life and would have to be replaced. That process set in motion a series of changes that would upend the way Stampin’ Up! picked items and filled orders, setting the company on a path toward continuous improvement.
“We began a process to replace the WMS, with no intent to do anything else,” explains Rich Bushell, the company’s director of global distribution services. “But when we started to investigate a new WMS, we began to look at the larger picture. We saw problems within our [picking] system. Really, they were problems with our processes.”
Stampin’ Up! had hired global supply chain consulting firm Argon & Co. to help with the WMS selection and implementation, and it was that process that sparked the change. Argon & Co. Partner Steve Mulaik, who worked on the project, says it quickly became clear that Stampin’ Up!’s zone-based pick-and-pass fulfillment process wasn’t working well—primarily because pickers spent a lot of idle time waiting for the next order. Under the old system, which used pick-to-light technology, workers stood in their respective zones and made picks only from their assigned location; when it came time for a pick, the system directed them where to make that pick via indicator lights on storage shelves. The workers placed the picked items directly into shipping boxes that would be passed to the next zone via conveyor.
“The business problem here was that they had a system that didn’t work reliably,” Mulaik explains. “And there were periods when [workers] would have nothing to do. The workload was not balanced.”
This was less than ideal for a DC facing accelerating demand for multi-item orders—a typical Stampin’ Up! order contains 17 to 21 items per box, according to Bushell. In a bid to make the picking process more flexible, Mulaik suggested eliminating the zones altogether and changing the workflow. Ultimately, that would mean replacing the pick-to-light system and revamping the pick-and-pass process with a protocol that would keep workers moving and orders flowing consistently.
“We changed the whole process, building on some academic work from Georgia Tech along with how you communicate with the system,” Mulaik explains. “Together, that has really resulted in the significant change in productivity that they’ve seen.”
RIGHTING THE SHIP
The Riverton DC’s new solution combines voice picking technology with a whole new process known as “bucket brigade” picking. A bucket brigade helps distribute work more evenly among pickers in a DC: Pickers still work in a production-line fashion, picking items into bins or boxes and then sending the bins down the line via conveyor. But rather than stop and wait for the next order to come to them, pickers continue to work by walking up to the next person on the line and taking over that person’s assignment; the worker who is overtaken does the same, creating a process in which pickers are constantly filling orders and no one is picking from the same location.
Stampin’ Up! doesn’t follow the bucket brigade process precisely but has instead developed its own variation the company calls “leapfrog.” Instead of taking the next person’s work, pickers will move up the line to the next open order after completing a task—“leapfrogging” over the other pickers in the line to keep the process moving.
“We’re moving to the work,” Bushell explains. “If your boxes are full and you push them [down the line], you just move to the open work. The idea is that it takes the zones away; you move to where the next pick is.”
The voice piece increases the operation’s flexibility and directs the leapfrog process. Voice-directed picking allows pickers to listen to commands and respond verbally via a headset and handheld device. All commands filter through the headset, freeing the worker’s eyes and hands for picking tasks. Stampin’ Up! uses voice technology from AccuSpeechMobile with a combination of company-issued Android devices and Bluetooth headsets, although employees can use their own Bluetooth headsets or earbuds if they wish.
Mulaik and Bushell say the simplicity of the AccuSpeechMobile system was a game-changer for this project. The device-based system requires no voice server or middleware and no changes to a customer’s back-end systems in order to operate. It uses “screen scrape” technology, a process that allows the collection of large volumes of data quickly. Essentially, the program translates textual information from the device into audible commands telling associates what to pick. Workers then respond verbally, confirming the pick.
“AccuSpeech takes what the [WMS] says and then says it in your ear,” Bushell explains. “The key to the device is having all the data needed to make the pick shown on the screen. However, the picker should never—or rarely—need to look at the screen [because] the voice tells them the info and the commands are set up to repeat if prompted. This helps increase speed.
“The voice piece really ties everything together and makes our system more efficient.”
And about that system: Stampin’ Up! chose a WMS from technology provider QSSI, which directs all the work in the DC. And the conveyor systems were updated with new equipment and controls—from ABCO Systems and JR Controls—to keep all those orders moving down the line. The company also adopted automated labeling technology and overhauled its slotting procedure—the process of determining the most efficient storage location for its various items—as part of the project.
MISSION ACCOMPLISHED
Productivity improvement in the DC has been the biggest benefit of the project, which was officially completed in the spring of 2023 but continues to bear fruit. Prior to the change, Stampin’ Up! workers averaged 160 picks per hour, per person. That number rose to more than 200 picks per hour within the first few months, according to Bushell, and was up to 276 picks per hour as of this past August—a more than 70% increase.
“We’ve seen some really good gains,” Bushell says, adding that the company has reduced its reliance on both temporary and full-time staff as well, the latter mainly through attrition. “Overall, we’re 20% to 25% down on our labor based on the change …. And it’s because we’re keeping people busy.”
Quality has stayed on par as well, something Bushell says concerned him when switching from the DC’s previous pick-to-light technology.
“You have very good quality with pick-to-light, so we [worried] about opening the door to errors with pick-to-voice because a human is confirming each pick,” he says. “But we average about one error per 3,300 picks. So the quality is really good.”
On top of all that, Bushell says employees are “really happy” with the new system. One reason is that the voice system is easy to learn—so easy, anyone can do it. Stampin’ Up! runs frequent promotions and special offers that create mini spikes in business throughout the year; the new system makes it easy to get the required temporary help up to speed quickly or recruit staff members from other departments to accommodate those spikes.
“We [allocate] three days of training for voice, but it’s really about an hour,” Bushell says, adding that some of the employees from other departments simply enjoy the change of pace and the exercise of working on the “leapfrog” bucket brigade. “I have people that sign up every day to come pick.”
Not only has Stampin’ Up! reduced downtime and expedited the picking of its signature rubber stamps, paper, and crafting supplies, but it’s also blazing a trail in fulfillment that its business partners say could serve as a model for other companies looking to crank up productivity in the DC.
“There are a lot of [companies] that have pick-and-pass systems today, and while those pick-and-pass systems look like they are efficient, those companies may not realize that people are only picking 70% of the time,” Mulaik says. “This is a way to reduce that inactivity significantly.
“If you can get 20% of your productivity back—that’s a big number.”
With its new AutoStore automated storage and retrieval (AS/RS) system, Toyota Material Handling Inc.’s parts distribution center, located at its U.S. headquarters campus in Columbus, Indiana, will be able to store more forklift and other parts and move them more quickly. The new system represents a major step toward achieving TMH’s goal of next-day parts delivery to 98% of its customers in the U.S. and Canada by 2030, said TMH North America President and CEO Brett Wood at the launch event on October 28. The upgrade to the DC was designed, built, and installed through a close collaboration between TMH, AutoStore, and Bastian Solutions, the Toyota-owned material handling automation designer and systems integrator that is a cornerstone of the forklift maker’s Toyota Automated Logistics business unit. The AS/RS is Bastian’s 100th AutoStore installation in North America.
TMH’s AutoStore system deploys 28 energy-efficient robotic shuttles to retrieve and deliver totes from within a vertical storage grid. To expedite processing, artificial intelligence (AI)-enhanced software determines optimal storage locations based on whether parts are high- or low-demand items. The shuttles, each independently controlled and selected based on shortest distance to the stored tote, swiftly deliver the ordered parts to four picking ports. Each port can process up to 175 totes per hour; the company’s initial goal is 150 totes per hour, with room to grow. The AS/RS also eliminates the need for order pickers to walk up to 10 miles per day, saving time, boosting picking accuracy, and improving ergonomics for associates.
The upgrades, which also include a Kardex vertical lift module for parts that are too large for the AS/RS and a spiral conveyor, will more than triple storage capacity, from 40,000 to 128,000 storage positions, making it possible for TMH to increase its parts inventory. Currently the DC stores some 55,000 stock-keeping units (SKUs) and ships an average of $1 million worth of parts per day, reaching 80% of customers by two-day ground delivery. A Sparck Technologies CVP Impack fit-to-size packaging machine speeds packing and shipping and is expected to save up to 20% on the cost of packing materials.
Distribution, manufacturing expansion on the agenda
The Columbus parts DC currently serves all of the U.S. and Canada; inventory consists mostly of Toyota’s own parts as well as some parts for Bastian Solutions and forklift maker The Raymond Corp., which is part of TMH North America. To meet the company’s goal of next-day delivery to virtually all parts customers, TMH is exploring establishing up to five additional parts DCs. All will be TMH-designed, owned, and operated, with varying levels of automation to meet specific needs, said Bret Bruin, vice president, aftermarket sales and operations, in an interview.
Parts distribution is not the only area where TMH is investing in expanded capacity. With demand for electric forklifts continuing to rise, the company recently broke ground for a new factory on the expansive Columbus campus that will benefit both Toyota and Raymond. The two OEMs—which currently have only 5% overlap among their customers—already manufacture certain forklift models and parts for each other, said Wood in an interview. Slated to open in 2026, the $100 million, 295,000-square-foot factory will make electric-powered forklifts. The lineup will include stand-up rider trucks, currently manufactured for both brands by Raymond in Greene, New York. Moving production to Columbus, Wood said, will not only help both OEMs keep up with fast-growing demand for those models, but it will also free up space and personnel in Raymond’s factory to increase production of orderpickers and reach trucks, which it produces for both brands. “We want to build the right trucks in the right place,” Wood said.
Editor's note:This article was revised on November 4 to correct the types of equipment produced in Raymond's factory.
“The latest data continues to show some positive developments for the freight market. However, there remain sequential declines nationwide, and in most regions,” Bobby Holland, U.S. Bank director of freight business analytics, said in a release. “Over the last two quarters, volume and spend contractions have lessened, but we’re waiting for clear evidence that the market has reached the bottom.”
By the numbers, shipments were down 1.9% compared to the previous quarter while spending dropped 1.4%. This was the ninth consecutive quarterly decrease in volume, but the smallest drop in more than a year.
Truck freight conditions varied greatly by region in the third quarter. In the West, spending was up 4.4% over the previous quarter and volume increased 1.1%. Meanwhile, in the Southeast spending declined 3.3% and shipments were down 3.0%.
“It’s a positive sign that spending contracted less than shipments. With diesel fuel prices lower, the fact that pricing didn’t erode more tells me the market is getting healthier,” Bob Costello, senior vice president and chief economist at the American Trucking Associations (ATA), said in the release.
The U.S. Bank Freight Payment Index measures quantitative changes in freight shipments and spend activity based on data from transactions processed through U.S. Bank Freight Payment, which processes more than $42 billion in freight payments annually for shippers and carriers across the U.S. The Index insights are provided to U.S. Bank customers to help them make business decisions and discover new opportunities.
Parcel giant FedEx Corp. is automating its fulfillment flows by investing in the AI robotics and autonomous e-commerce fulfillment technology firm Nimble, and announcing plans to use the San Francisco-based startup’s tech in its own returns network.
The move is significant because FedEx Supply Chain operates at a large scale, running more than 130 warehouse and fulfillment operations in North America and processing 475 million returns annually. According to FedEx, the “strategic alliance” will help to scale up FedEx Fulfillment with Nimble’s “fully autonomous 3PL model.”
“Our strategic alliance and financial investment with Nimble expands our footprint in the e-commerce space, helping to further scale our FedEx Fulfillment offering across North America,” Scott Temple, president, FedEx Supply Chain, said in a release. “Nimble’s cutting-edge AI robotics and autonomous fulfillment systems will help FedEx streamline operations and unlock new opportunities for our customers.”
According to Nimble founder and CEO Simon Kalouche, the collaboration will help enable FedEx to leverage Nimble’s “fast and cost-effective” fulfillment centers, powered by its intelligent general purpose warehouse robots and AI technology.
Nimble says that more than 90% of warehouses today still operate manually with minimal or no robotics, and even those automated warehouses use robots with limited intelligence that are restricted to just a few warehouse functions—primarily storage and retrieval. In contrast, Nimble says its “intelligent general-purpose warehouse robot” is capable of performing all core fulfillment functions including storage and retrieval, picking, packing, and sorting.
For the past seven years, third-party service provider ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.
Photo courtesy of Dematic
For the past four years, automated solutions provider Dematic has helped support students pursuing careers in the STEM (science, technology, engineering, and mathematics) fields with its FIRST Scholarship program, conducted in partnership with the corporate nonprofit FIRST (For Inspiration and Recognition of Science and Technology). This year’s scholarship recipients include Aman Amjad of Brookfield, Wisconsin, and Lily Hoopes of Bonney Lake, Washington, who were each awarded $5,000 to support their post-secondary education. Dematic also awarded $1,000 scholarships to another 10 students.
Motive, an artificial intelligence (AI)-powered integrated operations platform, has launched an initiative with PGA Tour pro Jason Day to support the Navy SEAL Foundation (NSF). For every birdie Day makes on tour, Motive will make a contribution to the NSF, which provides support for warriors, veterans, and their families. Fans can contribute to the mission by purchasing a Jason Day Tour Edition hat at https://malbongolf.com/products/m-9189-blk-wht-black-motive-rope-hat.
MTS Logistics Inc., a New York-based freight forwarding and logistics company, raised more than $120,000 for autism awareness and acceptance at its 14th annual Bike Tour with MTS for Autism. All proceeds from the June event were donated to New Jersey-based nonprofit Spectrum Works, which provides job training and opportunities for young adults with autism.