Ports to Work Long Hours in Effort to Cut Congestion

If some of the nation’s largest retailers have anything to say about it, business at the ports of Los Angeles and Long Beach will never be the same.

Most of the ports’ leading importers say they will shift a considerable portion of their cargo movements to nights and Saturdays. The changeover will begin July 25 when all terminal gates will remain open past regular hours for the first time ever, just as the heaviest trade season kicks into high gear.

The extended hours program, called OffPeak, is the first of its kind at major U.S. ports -- and so is the $40-$80 “traffic mitigation fee” that will be slapped on each container leaving the ports at other than off-peak hours.

OffPeak represents a significant reshaping of how business is conducted at the twin ports, and much rides on its acceptance by the largest 15 importers, who together accounted for one of every six of the record 13.1 million standard 20-foot containers that moved through the ports last year.

If it works, one of the region’s strongest job-creation engines will run more efficiently, daytime freeway traffic will be reduced and the crushing cargo congestion that plagued the ports last summer and fall will not recur.

If it fails, shipping lines and customers will probably escalate efforts to reduce their reliance on the nation’s largest seaport complex. And the success of OffPeak isn’t assured: The program was delayed several times while terminal operators worked through operational snags, even as they fielded objections from truckers about the new hours and from importers about the new fees.

“This is hugely important,” said John Husing, an economist who tracks the Inland Empire’s warehouse and distribution center industry, which is linked to the ports’ operations. “For blue-collar workers, the most important shift in Southern California’s economy has been the creation and growth of the trade logistics sector.”

For decades, the ports have been an orderly world where ships bring in containers of goods that are then transported to rail yards or terminal warehouses for pick-up by trucks. Even though activity inside the two ports continues long into the night, the standard procedure has been to close the gates of the 13 terminals at 5 p.m., sometimes stranding truck drivers who had to wait until the gates reopened at 8 a.m. the next weekday.

That worked until 2004, when cargo volume surged. There weren’t enough workers to unload the ships, forcing them to wait offshore. Railroads and terminals were overwhelmed, delaying merchandise deliveries. Idled ships and trucks pumped even more pollution into the air, angering neighbors.

Shipping lines hope that the extended hours, combined with increased hiring at the docks and railroads, will prevent cargo backups and forestall any legislative effort to cap port business.

Starting in two weeks, most terminal gates will be open to truckers from 8 a.m. to 3 a.m. weekdays and from 8 a.m. to 6 p.m. Saturdays. A surcharge will be imposed on containers moved between the peak weekday hours of 3 a.m. and 6 p.m. Most gates will be closed Sundays.

Port operators hope that the new peak fees will push 20% of cargo traffic to evenings and Saturdays this year, rising to 40%-45% by year three, according to Bruce Wargo, general manager of PierPass, the group administering the program.

“We need to demonstrate that our industry understands the need to address community concerns ... and that is exactly what PierPass is all about,” said Tupper Hull, a spokesman for the Pacific Merchant Shipping Assn., which represents shipping lines and marine terminal operators on the West Coast.

Wal-Mart is an example of the potential price of failure.

The Bentonville, Ark.-based retailer, the biggest importer at the local ports, just opened a 4-million-square-foot distribution center outside Houston to handle merchandise for the eastern half of the nation. A large portion of those goods previously came through Southern California but in the future could travel through the Panama Canal to Houston’s port.

Wal-Mart wouldn’t comment on whether it would use extended hours at the Southern California ports, although a spokeswoman said the Houston distribution center would “help us to diversify to have locations on the East Coast, West Coast and in the Gulf.”

But several major companies, including Home Depot Inc., Heineken USA Inc. and Lowe’s Cos., are enthusiastic about the extended hours. In fact, most of the ports’ other big importers said they would participate in the program to some extent.

“Absolutely. Our plan is to try to do it all at night,” said Jaime Martinez, West Coast distribution manager for Ikea North America. Martinez said that an inability to rely on timely deliveries from the ports last summer made it impossible to predict how much warehouse labor would be needed, and when.

Night hours, he added, “should even things out and allow us to operate with a smooth flow.”

Sears Holdings Corp. is embracing the program to avoid congestion and the surcharge for moving cargo during peak hours, said spokesman Chris Brathwaite. “It is definitely something we are going to utilize,” he said.

Smaller companies also say that the OffPeak program fits into their strategies for avoiding the delays that hurt holiday sales last year.

“It actually works out better for us, since we’re out in Rialto now, and we can get freight to Rialto faster in the middle of the night,” said Isaac Larian, chief executive of MGA Entertainment, maker of Bratz dolls.

One uncertainty, however, is whether enough truck drivers are willing to work nights and Saturdays to make OffPeak a success, observers said.

The independent owner-operators who do most of the truck hauling to and from the ports take those jobs because their rigs tend to be older, less fuel-efficient and less suited to higher-paying cross-country routes, say the trucking companies who hire them. And these drivers like being home at night.

“We have polled our drivers and none of them want to work past 10 or 11 p.m. at night,” said Sara Stetson, general manager of Expedite Truck Lines, a Long Beach firm with about 60 trucks. “They want to be home for dinner, help their children with their homework and they want to tuck them into bed at night.”

But Ikea’s Martinez and representatives of other major retailers say that they aren’t anticipating problems because drivers will be lured by the prospect of avoiding long peak-hour delays, which will mean more work.

One way or another, the congestion problem will provide its own solution, economist Husing said. Booming international trade is boosting port business, with some predicting as many as 15 million 20-foot containers moving through the ports this year, a 14.5% increase.

“Ultimately, if you can’t move the traffic off peak on a voluntary basis, it has to be required,” Husing said. “There is a point where the congestion will demand it.”