West Coast Port Crisis

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Here's a great article from the Journal of Commerce regarding the port problems that are currently affecting many of our suppliers' incoming shipments:

LA-Long Beach, Oakland, PNW congestion reaches critical stage
Bill Mongelluzzo, Senior Editor | Feb 03, 2015 4:06PM EST

Congestion in Los Angeles-Long Beach has reached a crisis stage with 20 container ships stuck at anchor Tuesday in the largest U.S. port complex — and no relief in sight.

The Marine Exchange of Southern California reported that the vessels at anchor increased by four since Monday. Shipping lines say vessels in recent weeks have been sitting at anchor for seven to 14 days, and when they proceed to berth, it takes another six to eight days to work the ships. Vessels in the trans-Pacific have been thrown so far off schedule that at least one line has no vessels available to carry containers from Asia because all of its ships are stuck on the West Coast.

Meanwhile, contract negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association appear to be going nowhere. Significant progress was made when the PMA on Jan. 26 confirmed that a tentative agreement was reached that would allow ILWU mechanics to inspect all chassis before they leave the marine terminals.

However, with hopes raised that a settlement could be forthcoming in a matter of weeks, ILWU negotiators reportedly stunned employers by returning to the bargaining table the next day with a dozen new demands, some of which are considered to be highly controversial.

Meanwhile, a dangerous standoff between employers and the ILWU continues. The PMA several weeks ago discontinued all vessel work on night shifts at all West Coast ports. Employers said the container yards had become so congested that night shifts would concentrate on clearing out the container yards so the yards would be able to accept containers when vessel work resumed the next morning.

The PMA said the crisis began to unfold in Los Angeles-Long Beach when the ILWU on Nov. 3 notified employers that the union hall would slash from 110 to 35 the number of yard crane operators that would be dispatched each day, and that has been the routine each day for the past three months.

The ILWU denies hard-timing employers, and said congestion has been present at the ports since last summer because of operational issues.

Conditions are not much better at other West Coast gateways. In fact, some lines are pulling back on their services to Oakland because of severe congestion at the Northern California port. In a service advisory to its customers on Jan. 30, Maersk Line reported that since the port “has hit a significant roadblock in its ability to service oceanborne cargo,” some future voyages will be terminated in Southern California, and Northern California cargo will be sent there via rail. The normal rotation in the Pacific Southwest is for vessels to call inbound in Los Angeles-Long Beach to discharge 80 percent or more of the containers, and then to stop in Oakland before proceeding back to Asia. Oakland reported four vessels at anchor and 14 outside of the Golden Gate Bridge on Tuesday.

Seattle and Tacoma are also terribly congested, with seven container vessels reported to be at anchor and awaiting berthing space. The PMA said the ILWU is hard-timing employers in Oakland and Seattle-Tacoma by reducing crane productivity from a historical level of about 28 container moves per crane, per hour. The ILWU denies engaging in work slowdowns in the northern ports, although the PMA has maintained a running count of crane productivity each day.

Contract negotiations began on May 12, 2014, and proceeded without incident even after the previous West Coast waterfront contract expired on July 1. Port congestion has been an issue since last summer. Big ships discharging thousands of containers in a single vessel call, carrier alliances discharging containers over multiple terminals in the same port complex, chassis shortages and dislocations and intermodal rail service problems contributed to the congestion. The PMA said those problems, though real, suddenly turned into a gridlock situation in early November when the ILWU hard-timing began.

The contract negotiations have been held under the auspices of the Federal Mediation and Conciliation Service since Jan. 6. The FMCS has maintained a high success rate in mediating labor disputes across the country. The mediator cannot dictate a solution, but rather attempts to bring both parties together in a spirit of compromise.

With terminal congestion and vessel backlogs now at a crisis level, time is quickly running out, and there appears to be a growing call among cargo interests and indeed some employers that more drastic actions be taken.

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