The amount of cargo moving through the Ports of Los Angeles and Long Beach was down slightly in July as retailers braced for a possible strike by dockworkers this fall.
The ports were bustling in May and June as retailers rushed to shore up their inventories in preparation for back-to-school shopping. But by July, the amount of cargo moving through the two ports leveled off due to uncertainty about contract negotiations between West Coast port operators and the International Longshoreman’s and Warehouse Union.
The Port of Los Angeles posted a year-over-year increase of 0.25% in total containerized imports and exports in July. Imports declined by 1.98% and exports increased by 3.62%.
At the Port of Long Beach, total container volume increased 3.7%, with imports up 0.9% and exports down 6.2% compared to July 2013, according to statistics released by the ports.
Contract Already Expired
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.
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.”
Ben Hackett — founder of Hackett Associates and author of Port Tracker, which is published in conjunction with the National Retail Federation – said that even though imports are higher due to the labor uncertainty, trade volumes remain solid due to a strengthening US economy.
“The impact of this is that the Peak Season will be muted, suggesting that the monthly growth rates will be les than the seasonal norm,” Hackett wrote. “Due to the jump in July imports, our West Coast projections were well up but not strong enough as we had anticipated more of a shift to the all-water route. Clearly, economic fundamentals are no match for cautionary measures to safeguard against labor relations.”
Important Route for Imports, Exports
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.
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. The last work stoppage, which occurred in 2002, lasted 10 days and caused an estimated $15 billion in reported losses and created a backlog of cargo that took several months to be cleared.