Deepwater Ports on the West Coast of the U.S. (Source: http://commons.wikimedia.org/wiki/File:Deep-water_ports_on_North_America%27s_west_coast,_connected_to_the_rail_grid.png)
Every year with Christmas just round the corner, businesses around the world gear up for brisk operations as people go on shopping sprees. This year should be no different. Alas! That is not the case. Being played out at the twin ports of Los Angeles and Long Beach is a battle of nerves that promises to play spoilsport this festive season.
Long standing truck lines greet you and over a dozen container ships have queued up outside ports, something that happens once in a blue moon. Some say, this is the worst congestion in a decade. Also affected are the ports of Tacoma and Seattle.
Labor unions representing 20,000 West Coast dock workers are still negotiating with representatives of shipping lines and terminal operators. Talks started in May. Worker contracts expired at July-end and they have been working without contracts since then.
Now, the ports of Los Angeles and Long Beach are the busiest container ports in the United States respectively ranking number one and two for traded volumes. Between them, they handle 43% of the volume of containerized goods entering the U.S.
Both sides continue leveling accusations on the other as neutral observers point to the more solid causes. Now, a broad coalition of the affected parties has urged President Obama to intervene under the Taft Hartley Act 1947 to resolve the crisis. The act monitors the powers and operations of labor unions.
With the end of the deadlock nowhere in sight, many might find it hard to lay their hands on their favorite merchandise. Worse still, this bodes ill for the economy of the entire region for the port is central to the businesses of manufacturers, importers, exporters, wholesalers, retailers, transporters, and logistics providers.
What’s the Matter?
With about 42,000 members, the International Longshore and Warehouse Union (ILWU) includes dock workers from the West Coast of the U.S., Alaska, Hawaii, and the province of British Columbia in Canada.
Pacific Maritime Association (PMA) represents 72 leading international maritime shippers and terminal operators. Their main task is to negotiate and execute maritime labor agreements with the ILWU at 29 ports in the United States.
While the PMA accuses the ILWC of not continuing with the agreed ‘normal operations’ till a solution is forged, the ILWC says the term ‘normal operations’ is undefined and that the two sides have an historic disagreement over the definition of the term.
However, the ILWC is not confirming if its members have deliberately slowed down work at these and other West Coast ports to reinforce its position at the bargaining table. Similarly, the ILWC is silent on PMA’s allegation that the ILWC has refused to dispatch qualified crane operators at these ports, an action that adds to the delay.
Truck Queues at the California United Terminal, Long Beach Port
On the contrary, the ILWC claims that the PMA is covertly seeking to relieve dock workers of their conventional responsibility of maintaining chassis – large, wheeled metal beds that trucks use to transport container-laden trailers. The ILWC also alleges that the PMA is no longer negotiating over training programs.
Presently, it takes 7 to 10 days longer than before to obtain goods from these ports. Average truck turn time jumped from 89 minutes in August to 101 minutes in October. Retailers are re-routing their goods through other ports on the East Coast, Gulf Coast, Canada, and Pacific Northwest amidst fears that some importers might shift permanently.
- Neutral experts point to the following causes apart from the failing negotiations:
Trailer Shortage is the almost-unanimous main cause. Shipping lines exited from owning the chassis-trailers throughout the U.S. Leasing companies now own and operate trailers whose availability does not match the demand
Truckers have to make additional trips to find their allotted trailers and this adds to the delay. The affected ports are creating a plan for a shared pool of trailers to shorten delays
- Larger Ships & Carrier Alliances means large ships that take more time to load-unload are always fully loaded. Present terminals were designed for ships one-third of the size of such ships. Leasing companies naturally cite this as the main cause. Terminals have to evolve to meet this expansion
- Peak Shipping Season coupled with retailers ordering more goods in anticipation of the strike has created a massive influx of goods
- Trucker Deficit means there are fewer hands for transporting the stacked up containers. Most economic recovery periods witness trucker shortage as trucking companies find it hard to hire and retain drivers
Last time a similar bottleneck erupted at these ports in 2004, the authorities urged truckers to work during nights and liquidated the problem. The present situation demands a similar, out-of-the-box approach particularly for dealing with the botched up negotiations.