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Last time, I talked about how important street turns are, and I'll reiterate - Street turns are probably the single most impactful thing we can do to improve issues across the shipping industry.
If this is true, why have we as an industry not done anything significant to address the issue and actually do street turns at scale? Why haven't we poured money into figuring it out, instead of squandering billions of dollars a year on wasteful empty truck trips, road and port congestion, demurrage, and other fees? Why have we accepted partial solutions that actually make things worse? It seems so simple, just let two motor carriers exchange a container. How hard can that be?
Well, like most things in the intermodal industry, things aren't so simple on the ground, and the fruit isn't as low hanging as it seems. I believe the reason we have not addressed the issue as an industry is that there are is are multiple problems to overcome to get this to work at scale. Any real solution must address all of these problems, account for them, and then perform the actual mechanics of executing a street turn.
At the end of this series, I'm going to be proposing a solution that does exactly this. But let me for now describe some of the difficulties faced in doing street turns at scale.
Matching equipment is hard: For a street turn, you must match an import container with an empty of the same size (40' or 20'), from the same ship line, and grade (paper, food, tobacco). So, for example, a container used for an Evergreen import of Chinese guardian stone lions will not be usable for a Cosco export of paper (requiring a very clean container) for multiple reasons. Some solutions focus on this with large marketplaces of container opportunities, but this can quickly become a needle in a haystack problem when approaching scale.
There's no visibility: To perform a street turn, you have to first locate an empty container somewhere away from the marine terminals. You have to know where the container is in order to decide whether or not the triangulation makes sense. This, believe it or not, is rather difficult in our industry. It turns out that almost no one knows the location of empty containers except for the motor carrier and the customer. In many cases, the port doesn't even know where the containers are destined! This is because no one wants to let the world know who or where their customers (and containers) are. Because of this, most street-turn systems rely on companies volunteering this information. Most won't do this, and efforts that rely on this model have languished with relatively small numbers of street turns. I've tried this approach before with StreetTurns.com and this was the issue I faced.
Timing is an issue: You need to know "when" a container will become empty and available. Just because there's an import container sitting in a motor carrier's lot or at a BCO, doesn't mean it's empty and ready for re-use.
They are laborious: It takes someone (a dispatcher or import manager for example) time to set up a street turn, find and coordinate the drop-off location, and deal with any issues that arise. As a result, many motor carriers largely only perform street turns with their own drivers, where there's already a communication channel open and issues are easily fixable.
There's competition: Another interesting fact encountered when attempting this in the past is that an import motor carrier likely views their empty container as something that has value (it does, and more on that later) and doesn't want to give something of value to a competitor, or at the very least views their participation as something that should be compensated for.
Diminishing rates: Motor carriers are worried about their dray rates will plummet as their customers demand to pay only for one-way moves, instead of the roundtrip to and from the ports.
Dray rates are already LOW: Depending on the distance of the move from the port, dray rates may be so low, that the overhead only leaves $10s of dollars of profit, and not much room for cost savings. When it takes time to arrange and execute a street turn, many may simply return to the port to pick up an empty.
There's a perception that you need permission: Believe it or not, street turns were once specifically prohibited by the UIIA agreement which governs equipment use. This changed in 2015, but most would assume you need to ask the steamship lines if you can do a street turn. This is not the case, you only really need the authority.
You need Authority: You do need authority to do a turn. Truckers cannot do this themselves, they do need a UIIA signatory party to issue an interchange.
There's a chassis, too: It's not just the container. Without lift capability outside the port, the chassis under that container is also under the care and custody of the import motor carrier. If the chassis was rented from a chassis pool, the chassis pool needs notification too. If not, and it's an owner's chassis, there needs to be lift capability outside the port, and that is not a common capability.
There's industry resistance: There's a perception, especially with parties who hire union labor, that street turns will spark labor issues, and that labor unions will see street turns as something that threatens union work. Specifically, a worry that the maintenance and repair of chassis will go down and a reduction in gate traffic will require less gate labor. Because of this, ports have been reluctant to embrace the practice, even though they know it's good for business. Any scalable solution will have to address concerns that ports and labor unions have.
Again, any solution with hopes of working at scale must address all of these issues, and the solutions that have been tried, and are currently being tried tend to focus on solving one of these issues to the exclusion of the others.
In part III I take an in-depth look at how each stakeholder benefits from street turns.
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