Southern California seaports responsible for more than 40 percent of U.S. imports are whittling down a three-month backlog of cargo that built up during a labor dispute, the harbor chiefs said.
On Tuesday morning, 29 ships waited outside the neighboring ports of Los Angeles and Long Beach, three fewer than a day earlier, according to the Maritime Exchange of Southern California. In late February, as many as 36 ships were stranded in the harbor shared by the two ports as fewer crane operators unloaded cargo during a months-long contract standoff between the dockworker union and port employers.
Eleven days after a tentative contract agreement, workers are making substantial if incremental progress in moving containers off ships and onto trucks and trains, Gene Seroka, the Los Angeles port executive director, and Jon Slangerup, his Long Beach counterpart, said at a conference in Long Beach.
“It’s unbelievable how much volume is moving out of the ports right now,” Slangerup said in an interview at the Trans Pacific Maritime Conference, sponsored by the Journal of Commerce. “We’re seeing an enormous turnout of labor. There’s no bad news other than having to rebuild relationships.”
Leaders of the ports of Los Angeles and Long Beach will meet this month to develop measures such as a joint truck maintenance yard to relieve congestion that choked off trade late last year and early this year, Seroka and Slangerup said. The Federal Maritime Commission on Feb. 27 approved the competing ports’ request to work together on speeding cargo movement.
Busiest Port
The Port of Los Angeles, the nation’s busiest, handled 29 percent less cargo in January 2015 compared with January 2014, and volumes were down 19 percent in neighboring Long Beach, the second-busiest port. Both trade gateways suffered as contract talks broke down between the International Longshore and Warehouse Union and the Pacific Maritime Association, which represents employers at 29 West Coast ports.
“The delays just became astronomical,” said Donna Lemm, vice president of global sales for Mallory Alexander International Logistics, based in Memphis, Tennessee. “It was very natural for us to move east: Savannah, Charleston.”
Slangerup said he’s concerned about losing business to competitors along the Gulf and East coasts, although he said the West Coast remains the cheapest option to move goods to and from Asia and South America.
Rail Connections
He said his port is spending $4.5 billion to improve rail connections, automate a terminal and replace a bridge. Seroka said his port is spending $2.7 billion in the next decade on improvements to more quickly move cargo.
Shippers will continue to send cargo to ports along the Pacific coast of Canada and Mexico, said Mario Moreno, a trade economist for the Journal of Commerce. Moreno cut his forecast for U.S. import growth in the first three months of this year to 2 percent from 7 percent, due largely to congestion and labor discord. He said trade volume will continue to miss forecasts from April through June, as port operators struggle to clear out ships and cargo. Moreno said the stronger dollar and weakening demand for products in Europe and Asia also will depress trade volume this year.
“The damage in the first quarter trade volume is done and there’s nothing we can do about that,” Moreno said at the conference.
Some of the shippers who left West Coast ports during the labor dispute won’t come back, said Rose Kelly-Falls, senior vice president of supply chain risk management at New York-based Rapid Ratings International.
“A lot of companies are going to be thinking of alternative sources, alternative ports,” she said in a telephone interview.’’ If it’s not the West Coast, it’s going to be the East Coast. There’s going to be an impact.’’
Speaking to shipping executives Monday evening at the Trans Pacific Maritime conference, Los Angeles Mayor Eric Garcetti said his port and Long Beach’s will sell themselves as models of innovation.
“With the settling of the labor issue, we’re not going back,” Garcetti said. “We’re actually doubling down.”