An increasing number of cargo container ships heading for West Coast ports have been diverted to the East Coast due to concerns about ongoing contract negotiations between West Coast port operators and the International Longshore and Warehouse Union.
While container traffic at ports in Los Angeles, Long Beach and other West Coast locations saw near-record volumes just before the expiration of the latest contract July 1, since then many carriers with all-water services to the East Coast report that their ships have been full, according to the materials handling website JOC. And in some instances, cargo was “rolled” to subsequent voyages because container ships were over-booked.
Volume Down, Man Hours Up
Meanwhile, man-hours paid by employers at the Ports of Los Angeles and Long Beach were higher in August this year than they were last year. This could be attributed to heavy cargo volumes. Another cause could be a shortage of truck capacity, chassis shortages, and dislocations, as well as delays on the intermodal rail networks. When terminals are congested, workers are busier so man hours tend to be higher.
West Coast ports handle more than two-thirds of all US retail container cargo and most of the cargo arriving from Asia. While an expansion of the Panama Canal is expected to open up East Coast ports to the Panamax super-freighter cargo ships that commonly are used for Asian imports, the deepening and widening of the canal won’t be finished until later this year.
Asia to East Coast Takes Longer
One problem is that shifting cargo that normally arrives on the West Coast to East Coast and Gulf ports, as well as to ports in Canada and Mexico takes longer because container ships from Asia have to pass through the Suez Canal in Egypt — which connects the Mediterranean with the Red Sea — at least until the wider Panama Canals opens. For last minute orders, air cargo could be used, although that is substantially more expensive than shipping in cargo containers.
The deadline for a new contract between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association, which represents port owners, expired June 30. But both sides have publicly declared that they are committed to avoiding the type of cargo disruptions that occurred in 2002, when a strike shut down West Coast ports for 10 days, creating a backlog that took several months to be cleared. That disruption cost the US economy an estimated $15 billion in reported losses.
Contract Talks Continue
In June, the two sides issued a joint statement after the old contract expired: “While there will be no contract extension, cargo will keep moving, and normal operations will continue at all ports until an agreement can be reached between the Pacific Maritime Association (PMA) and ILWU.”
The ILWU, which represents 14,000 port workers at 29 ports from San Diego to Seattle, has threatened to go on strike if a new agreement can’t be reached.