Pop-up ports are here to stay, but the long-term solution is data

We hear daily about supply chain disruptions. Once again, the Port of Shanghai is shut down for Covid creating shipping disruption that looks more like an offshore blockade of the China coastline and will take months to unravel. This comes on top of the Ukraine war disruption and fundamental restructuring of supply chains to support new business models including the direct-to-customer movement.

Although the recent disruptions highlight the fragility of global supply chains, the disruption is fundamentally driven by higher volumes transported by larger ships using paper-driven workflow that has been years in the making.

One of the bottlenecks frequently highlighted is the congestion at America’s ports. While none of America’s ports are in the top 10 busiest globally, America’s aging infrastructure is especially apparent at U.S. coastal ports and waterways where steady growth in shipping and ever larger container ships have placed significant stress on the ability of our ports to handle the loads. This is causing significant backups that result in major global supply chain disruption as ships anchor offshore and containers sit in yards awaiting transport to final destinations. It’s a never-ending battle that goes well beyond the Covid issues that are frequently blamed.

To alleviate port congestion, the busiest ports are finding creative ways to stage containers closer to the customer by creating pop-up ports that make use of unused rail yards and other underutilized real estate close to main transportation arteries. This is being made possible through support of federal, state and local municipalities.

In a White House Action Plan for alleviating port congestion released late last year, the use of pop-up container yards by the Port of Savannah was a key action point. While the Georgia Port Authority was far ahead of the White House in its plan to alleviate congestion at the fourth busiest U.S. port, the reallocation of $8 million in federal reinvestment, some of which will fund pop-up ports outside of Georgia, are investments that could not be easily funded by the state without federal assistance.

In a different approach, Los Angeles/Long Beach, the largest port complex in the U.S. has been extending its reach and moving containers inland to alleviate congestion. Known as Pier S for Short Term Overflow Resource or STOR, the port moves containers whose goods are not immediately needed to Pier S to free up space at the main port to offload cargo and turnaround ships quicker. The original 30-acre Pier S space, opened in 2014 as a temporary overflow location, has been expanded to 70 acres and is an integral part of port operations.

In yet another approach, the Utah Inland Port Authority has partnered with the Port of Long Beach and the Union Pacific railroad to rapidly transport cargo from terminals in Long Beach to Salt Lake City for distribution throughout western states. The Utah Inland Port Authority is developing 16,000 acres outside Salt Lake City to become a logistics hub for western states.

Inland ports are not a new concept. Atlanta and Chicago have well-established inland ports; however, they, like their ocean brethren, have become a bottleneck over the past couple years as volumes increased. In addition to alleviating congestion, inland ports reduce risk by offering multiple modes of transportation such as rail, truck, and, in some cases, barges, thereby alleviating dependency on a single mode.

With pop-up ports and an expansion of inland ports a new hub and spoke transportation network is being formed that will make use of “idle capacity” to ease port congestion. Over time, I would expect to see other congested ports such as Charleston and Norfolk make use of these inland pop-up ports, creating jobs and revitalizing remote areas.

However, a critical requirement remains that could mean the difference between new pop-up ports easing congestion and speeding goods to their final recipient or becoming just another weigh station on the way to the final destination.

Shipping still moves by paper with no data standards and little visibility across the first and last mile. Without digitalization of shipping information using standard formats and exchange of data, the shipping industry is destined to suffer further delays and new bottlenecks as they address port congestion by adding additional nodes to the routes.

A data-driven approach is required to solve the long-term issue of providing the transparency needed to speed the delivery of goods and optimize the use of shipping assets. There is little cross-carrier communication today and use and availability of assets such as containers are not transparently managed. Data needs to be shared and new constellations of networks established to foster cooperation amongst all participants and enable data-driven decision-making. Only then will the supply chain start to meet customer expectations.

This was also recognized in the White House Plan, but without detailed actions it remains a plan for a plan. Data standards are required, and they are coming. The free market just needs a little assistance in getting started.

The Department of Transportation is working with the Federal Maritime Commission (DOT) to issue a request for information “on standardized data exchange requirements for goods movement in the transportation supply chain.” It remains to be seen if DOT can deliver what is needed in a historically decentralized business with fiercely independent players who view lack of visibility as competitive advantage.

Container loads at U.S. ports has not exceeded our ability to manage the volumes, but they have exceeded our ability to manage the work using the current paper-driven workflow and outdated technology. Optimizing shipping and logistics to meet customer expectations will require data-sharing and collaboration by all industry players.

Shawn Muma is director of supply chain innovation and emerging technologies for the Digital Supply Chain Institute (DSCI), a non-profit initiative of the Center for Global Enterprise. His experience includes structuring and managing technology alliances for IBM in the U.S., Europe, Asia, Middle East, and South America in a wide variety of industries including aerospace and defense, investment banking, retail banking, chemical and public sector. You can reach Shawn at [email protected].

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