A Hopeful Note on Street Turns

Welcome to the 107th edition of The LogTech Letter. TLL is a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, guest poster Grant Sernick, suggested why transportation visibility still lags consumer app maturity.

As a reminder, this is the place to turn on Fridays for quick reflection on a dynamic, software category, or specific company that’s on my mind. You’ll also find a collection of links to stories, videos and podcasts from me, my colleagues at the Journal of Commerce, and other analysis I find interesting.

For those that don’t know me, I’m Eric Johnson, senior technology editor at the Journal of Commerce and JOC.com. I can be reached at eric.johnson@spglobal.com or on Twitter at @LogTechEric.

Note: I’m on vacation this week so using this as a chance to give Brendan Tompkins, chief technology officer of Port Technology Services, a chance to close the loop on his street turn series with a hopeful conclusion. Over to Brendan.

In my previous posts, I've tried to make the case that the current methods we use to accomplish container triangulation are insufficient to scale street turns to their potential. We street turn roughly 2 percent of our empty export container needs here in the US, while overseas, they do slightly better, sourcing 8 percent of containers from the street. I believe we can achieve much higher rates.

Triangulation through street turns has been attempted in the US with different third-party models, but several factors have handicapped these models. Third parties don't have all the data needed to execute efficient matches. They don't have the apparent authority to issue interchanges. They don't hire union labor, so contract signatories tiptoe around their involvement with street turn programs. With third-party solutions, street turns are too tricky for some and too risky for others, and because of this, it's primarily viewed as a second-class citizen in the world of logistics.

Street Turns as a First Class Citizen of the Port

What happens if we rearrange our thinking about the lowly street turn? What if it wasn't seen as occurring in the back alleys and through complicated or pricy mechanisms? What if a street turn became the way export motor carriers get empty containers? What if we viewed the street turn as a first-class citizen of the port?

I invite you to consider this idea: Every empty container need should be first attempted to be sourced from the street.

Let that sink in for a second. What does the process look like if this is the goal? I call this the "Turn First" model of street turns. You are probably thinking to yourself that it's impossible. Timing, distances from importer to exporter, matching, and all of the issues we face when doing a single street turn seem insurmountable when we look at the empty inventory requirements in a given port community.

But I believe that it is possible, and here are some reasons why:

• We know that the empty inventory is out there and available. Looking at any port's data, you'll be able to match every empty picked up from the port with a matching empty returning on the same day (with excess volume for good measure) due to our import-export imbalance in the US.

• We are at a unique point in time with technology. Smartphones are ubiquitous, and every driver carries a device with GPS, video conferencing capabilities, and a high-quality camera.

• Our chassis practices are advancing, and pools are and will be getting better. Chassis pools solve the problem of sharing the chassis underneath the container. Pools are also running with newer inventory that decreases the likelihood of equipment issues on the street and makes the inspection process more manageable. Some pools even have GPS on all their chassis - a huge factor that can be leveraged in the triangulation process.

• Any empty sourced from the street has advantages across the board. The empty swap may not happen in the hinterland, but even if it occurs just across the street from the terminal, it's better than a gate move.

However, one thing must happen to make this all work at scale. The marine terminal operators must own and run the process. Picking up empties from the port should be discouraged explicitly by the port. When filling an empty booking, the port triangulates the move and provides an empty container for an exporter via a street turn. If this is unsuccessful, only then does the export motor carrier return to the port. This is why I call this method "Turn First," since it's the primary method used to find an empty.

The marine terminal operators will make the investment needed because a "Turn First" operation benefits their customers, the truckers, the local port community, the environment, and, ultimately, their bottom line.

What does a "Turn First" operation look like?

The marine terminal operators (with minor tweaks to their existing systems) have the data to do the triangulation. Knowing the destination of the import (at the zip code level), what motor carrier or BCO possesses the container, and what the export booking needs are for a particular move is basically what you need to arrange the match.

They also have to have permission to interchange containers given to them as a signatory to the Uniform Intermodal Interchange and Facilities Access Agreeemnt (UIIA). A virtual interchange can be issued just like at any other port facility. Nothing is preventing them from doing this.

Finally, the marine terminal operators are contracted and able to work with the union labor and jobs with the "Turn First" model; jobs will be created at the port, not lost.

Terminal operators will then work to find the matching equipment, arrange the street turn, follow the process to success, and deal with exceptional situations when things go wrong. They will do this using union labor and specially designed software tailored to this model — picture large centers with cubicles filled with people arranging and executing the match. Remote inspections will be done on the chassis and containers via a mobile app on the trucker's phone or tablet aided by AI and machine learning in the cloud. 

What if a match can't be arranged? The port will still have plenty of empties should this not work for a particular move. If any customer can't be serviced with a container on the street, they will come back to the marine terminals to pick up an empty like always, and the only difference will be the shorter lines at the port.

Will the "Turn First" Model Work?

Well, we won't know until we have tried. It won't be easy, but this is the only scalable way to address the problem. It will work better in some ports than others because, as we all know, once you've seen one port, you've seen one port. Ground conditions in some ports will be more favorable to this type of model — those with single large chassis pools and single marine terminal operators. Truck appointment systems and mature automation technology help. But once the model is proven, it should be able to be adapted for any port community.

The thinking around "Turn First" is strategic. When a street turn is a first-class citizen of port operations, operators will continuously invest in ways to improve the process. It will start slow, of course, but over time percentages will increase, and in time we will be doing much better than the measly 8 percent street turn rates seen overseas.

Ports historically have pushed through difficult-to-achieve things, and the process usually happens like this — the terminal operator plans and informs the community about a new approach X and community uproar ensues. Stakeholders decry all the pending disruption claiming that X will hurt their business. FUD runs rampant. Given time to adjust and adapt, the stakeholder community embraces the idea so steadfastly that if X were ever taken away, there'd be an uprising. Appointment systems, off-terminal empty yards, automation, and TWIC cards are good examples of this. So it's not unheard of for the port to make a sizable, disruptive change to how they do business — ultimately for the better.

So what are we going to do about this? The time is now. Let's partner up - tech leaders, forward-thinking motor carriers, marine terminal operators, steamship lines, and federal, state, and local governments. This effort will pay for itself, and we have all the puzzle pieces. We need to put them together.

I encourage you to reach out to Brendan via LinkedIn to discuss this topic. He’s passionate about it! I’ll be back next week with your regularly scheduled full-size LogTech Letter.

Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or S&P Global, and any opinions are mine only.