Welcome to the 64th edition of The LogTech Letter, a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, I shifted the focus of the current congestions crisis away from the goods movement industry and toward consumers. This week, I’m looking at the topic of dual transactions as a prism for larger problem solving in those congested ports.
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@ihsmarkit.com or on Twitter at @LogTechEric.
This Twitter thread on Tuesday, among the countless other supply chain crisis ™ threads doing the rounds these days, caught my eye.
Wen is the CEO of Dray Alliance, a Los Angeles-based venture-backed drayage marketplace. I interviewed Steve in February 2020 ahead of their funding round (in the before times). He’s one of a number of founders taking aim at a long-overlooked link in global supply chains: the drayage community. Along with Dray Alliance are PortPro, NEXT Trucking, and the OGs of the scene, Cargomatic.
Wen’s thread was illuminating because A) it had the faint glow of Ryan Petersen’s mid-October manifesto on what ails the port and how it could be fixed; but also B) because it tried to explain a single aspect of the gridlock in more detail. In other words, instead of trying to fix everything in a thread, Wen tried to unpick a single lock in the hopes that would help unpick further locks.
The topic: dual transactions in the port. If you follow people like Weston LaBar - formerly head of the Harbor Trucking Association, which represents drayage operators, and now head of strategy at Cargomatic – this is not a new topic. Dual transactions are port trucking moves where a driver drops off an empty container and pulls an import box in a single move inside a container terminal. It’s port-landside interface efficiency concentrated down to its essence. Don’t make a driver drive to the same terminal twice, or to one terminal for an empty drop and to another terminal for an import pickup. Reduce traffic around the ports, make drivers’ lives easier and more profitable, keep boxes flowing in both directions in a container terminal.
So simple right? Well, why hasn’t it happened? My colleague Bill Mongelluzzo, who has forgotten more about LA/LB port operations than most everyone else opining right now has ever known, has written so much about dual transactions that I’m sure I didn’t even find all the pieces in a quick Google search. Here’s a quick thread attached to Wen’s thread with a handful of pieces on the topic.
The answer is that, much like the rest of the global logistics industry, the ports of LA/LB are a highly fragmented commercial environment. It’s a patchwork of different operators, with different terminal operating systems, serving different containers lines, who in turn serve thousands of shippers and forwarders. There is no unifying port community system, and even if there was such a single repository of information, there’s no guarantee that all the tens of thousands of private parties interacting with the ports each day would use it without sufficient motivation.
To enable a dual transaction, you not only need to have a dray operator that can drop an empty and pull an import from the same terminal, it may need to be from the same container line. The appointment system at that terminal needs to account for dual transactions. And it needs to not automatically cancel the import pickup if the driver, for whatever reason, can’t return an empty. It needs to be able to adapt if the terminal refuses empties because the yard is full. It needs to interface with the drayage driver’s dispatch system or transportation management system. Visibility systems either need a direct feed to the terminal or drayage dispatch/TMS, or that data needs to be scrapable.
When all of those pre-requisites occur in an environment where each terminal has a different configuration (shape of the terminal, positioning of empty and loaded container stacks, areas for wheeled and ground operations, number of in/outgates, automation of in/outgates), the complexity gets pretty gnarly pretty quickly. Add to the mix that a lot of dray drivers are owner-operators (ie independent contractors) either lacking a single system to use daily or juggling different apps from different terminals they work at.
That’s why problems at the ports of LA/LB don’t get sorted in a day. That’s why proclaiming that 60,000 boxes that have dwelt longer than 10 days in the ports needed to be evacuated in 48 hours was nonsensical. It’s why Ryan Petersen’s Twitter thread didn’t alone save Christmas, and why Steve Wen’s thread is a great recap of the situation, but nothing that the principles involved didn’t already know.
A couple closing thoughts: Information about the supply chain crisis ™ is coming through two parallel channels. One is describing the mess for the person not involved in moving goods. This is good, explanatory journalism that helps everyone understand the complexity of the system upon which they rely, that there is not really one silver bullet. The other channel is information for the industry, analysis that helps them strategize and take action. Mike Solana, of the VC firm Founders Fund, which is an investor in Flexport, posited here that a third channel is taking root, where an entrenched CEO starts to bridge the chasm between industry operations, media, and political influence. You could argue that Gene Seroka, executive director of the Port of LA and the media face of the port congestion crisis, has been doing this too.
Second closing thought: Supply chains have generally worked, even through 2021. I would argue that the barrage of goods we’ve sent hurtling through our pipelines would overwhelm any system, and that the outside world’s relative indifference to supply chains until mid-’21 was a great sign that things worked pretty well, despite the technological and process inefficiencies those inside the industry understand well.
Dual transactions is, in a way, a perfect encapsulation of this. It’s an idea literally more than a decade old, held back by the eclectic structure of the industry and its reticence to adopt common technology platforms. The industry used its wiles to get around those inefficiencies, until the volume overwhelmed those workarounds. And it’s only when someone newer to the scene calls out those foundational inefficiencies that this age-old idea gets some much-needed attention.
Some upcoming events I’ll be involved in:
Today at 10 am ET on LogTech Live, I chat with Rathna Sharad, CEO of the technology provider FlavorCloud, which helps international sellers manage the travails of global logistics and trade compliance. I’ll be going through my topics of the day, dadjokes and buzzwords explained. The best way to tune in is to subscribe to LogTech Live via the Let’s Talk Supply Chain network.
On Nov. 11, I’m leading a discussion on how technology can (or can’t) help manage the detention and demurrage challenge at US ports. We’ll most definitely be talking about dual transactions. I’ll be joined by Peter Schneider, president of drayage provider TGS Logistics, and more panelists (to be announced soon). Register here for part 2 of the 3-part free webcast series leading up to TPMTech.
Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or IHS Markit, and any opinions are mine only.
Nice piece I agree with Steve that making dual transactions easier would go a long way toward resolving the logjam at the ports.
I'd be curious to see a piece outlining the different incentives/disincentives port actors (steamship lines, ports, terminal operators, trucking companies, brokers, labor, chassis owners, yard owners, nearby railyards, etc.) are operating under. I think it would be really helpful to delineate which actors profit from the mess (and therefore are not incentivized to solve it).
Eric
Vendorflow
https://www.vendorflow.co/