Are West Coast Labour Unions Stepping on Their Own Toes?
While the congestion at the many US West Coast ports are easing, there remains an incredible number of vessels waiting to discharge containers for US and Canadian importers. And as long as it takes to clear the backlog, intended exports from North America are delayed in making their way to the Far East.
A tentative contract agreement has been reached however is only scheduled for a ratification vote on May 22. In the meantime, longshore workers have stepped up their efforts in an attempt to get back to normal. The effect on manufacturers, distributors and retailers has been staggering in terms of overall revenue.
Johnathan Gold, Vice President for Supply Chain and Customs Policy at the National Retail Federation explains, “The contract talks are over, but the tentative agreement still has to be ratified and it’s going to take months to get back to normal on the West Coast.??? He goes on to say, “Going forward, we want labor, management and Washington to work together to see that we never again have a situation like what we went through these past several months.???
East Coast Port Options
Over the life of this labor dispute importers have been re-routing their cargo via US East Coast ports in order to stop the bleeding. However, the sudden increased volume of 10% at the top five East Coast ports are also experiencing delays so part of the congestion has simply changed coasts.
Another option may be quite a ways down the road for the Port of Miami. Significant infrastructure investments are completed or are underway so that they can increase their competitive position for handling container vessels. This is due in part to the expansion of the Panama Canal, slated for opening in spring 2016, which enable container vessels with a capacity of up to 14,000 TEUs to easily navigate the canal.
South of the Border
Mexico, in 2013, has committed to invest 46 billion dollars in port creation and expansion over the next 6 years. Concern from West Coast ports is minimal at this point in time as there may be logistical issues for containers discharged there for furtherance to northern points. Nevertheless, the future may see their investment prove challenging for the US West Coast ports.
Increase of Imports on the US West Coast
Still, after this long process, imports are still expected to increase by as much as 8-10% over the coming months at the top 5 West Coast Ports of Long Beach, Los Angeles, Oakland, Seattle and Tacoma. The new contract, if ratified in May, will be for 5 years. Barring a rejection of the contract, most importers are more at ease now that the backlog is being reduced. Some though, have this justified feeling that history could repeat itself 5 years from now.
So for now, the heat is off as day to day operations work their way back to a normal routine. But considering that other ports around the world are experiencing some level of congestion, the US West Coast labor dispute and backlog could be the benchmark that global ports will look to in order to plan for the future. The advent of super-sized container vessels are already a concern for many ports and more of these vessels are expected to come into operation shortly.
Mantoria Inc. is a full service logistics company and we understand that delays can really harm your business. We work hard to mitigate these delays by any means necessary; not just on the US West Coast but anywhere in the world. If you would like to learn more about Mantoria’s freight forwarding services, please contact us for a no obligation consultation.
