While the worst of the West Coast port disruptions may be over, the damage has already been done this year. Total US container imports sank more than 5% during January and February, compared to the same 2 months in 2014. The drop is attributed almost entirely to the months-long contract disputes and worker slowdowns at the West Coast ports. The ports of Los Angeles and Long Beach each saw container imports fall 19% and 20%, respectively, according to a new report from trade research firm Zepol.
Between January and February 2014, the US took in 2.93 million 20-foot containers (TEUs). This year, however, those same 2 months took in 2.78 million TEUs, the report showed.
The port throughput issues began in the second half of 2014, after the contracts between the International Longshore and Warehouse Union (representing 20,000 dockworkers) and the Pacific Maritime Association (representing terminal operators and shipping lines at 29 West Coast ports) expired June 30, 2014. Since then, the labor talks and subsequently work slowdowns began, with reports of significant backlogs surfacing at the end of November of 2014.
These 2 ports in California take in a combined 40% of all U.S. container imports, so it is not surprising the ongoing issues between union workers and port operators have dragged down import activity. Conversely, East Coast ports experienced an increase in activity at the start of the year, taking in an additional 34,000 TEUs in January and February 2015 compared to the same time period in 2014.
In a release about the report, Zepol’s CEO and trade data expert Paul Rasmussen said, “The decline along the West Coast has led to diverted shipments and a surplus in volume across the Atlantic and Gulf Coast. Due to these events, it’s the first time in over 11 years the port of New York/Newark has passed Long Beach as the second-largest port in the United States.”
You can check out the full report to see specific data on imports at each US port around the country.
Back to Normal?
Long Beach, California, Mayor Robert Garcia is optimistic business will return to normal at West Coast ports within 3 months. Union laborers and port operators made a tentative 5-year deal late last month regarding worker contracts. Garcia told The Wall Street Journal he thinks that deal will be ratified in April.
Others are planning for longer-term negative impacts. A recent survey by the Journal of Commerce showed 65% of shippers plan to send less cargo to West Coast ports this year and in 2016 in an effort to avoid ongoing congestion delays at the ports. One shipping executive (who remained anonymous) told the JOC he doubts things will return to normal at the ports and believes the workers’ “inflexibility will continue to plague the ports,” leading to continued congestion.
Those who feel the same are increasingly turning to ports in Canada, Mexico and the East Coast to send goods. Garcia, Long Beach’s mayor, does, however, realize his community may have already lost permanent business to East Coast ports during the slowdown.