In today’s Thursday Feature, we examine the lingering effects of the West Coast port labor problems, which created a logjam at cargo container ports from Seattle to San Diego that some are saying could take months to clean up.
Even though the union representing West Coast dockworkers and port owners finally reached a new contract agreement earlier this month, the effects of the nine month long dispute are still being felt, and some analysts are saying it could be weeks — or even months — before the backlog of cargo to be cleared form ports up and down the West Coast.
The West Coast labor problems is being blamed for a a decrease in January’s import numbers. According to a report issued by Panjiva — an online search engine that tracks global suppliers and manufacturers — total January shipments were down 10% from December’s. And they were down 12% from January 2013.
That marks the worst start to a new year since the company began measuring imports in 2007.
West Coast Ports to Blame
Josh Green, Panjiva’s CEO, said there was a direct connection between the poor import numbers and the labor problems that were going on at West Coast ports. As contract negotiations heated up, union dock workers reportedly participated in a work slow-down and port owners responded by threatening to lock out workers during weekends.
The resulting delays in the loading and offloading of cargo containers — mostly bound for Asia — created a backup that is still being dealt with.
“January in general is relatively slow, and this year we saw it was particularly slow, with the key drive appearing to be the trouble at West Coast ports,” Green said, adding that February numbers may show improvement there is still caution among some executives about whether improving economic indicators are the real deal.
“As we head into the res of 2015, we should see global trade reflecting the confidence of sourcing executives about what consumers will be doing and certainly as we headed to the end of 2014 we saw sourcing executives were feeling confident, with end of year retail numbers looking relatively good,” Green told Modern Materials Handling.
“I think that provides some momentum early into 2015, but at the same time sourcing executives are not as confident about heading into 2015 as they were heading into 2014, which reflects disappointment about the 2014 holiday season,” he said. “Given all the macroeconomic indicators like improving jobs numbers and the low price of oil, things felt very positive heading into the holiday season. And at the end of the day, it was a fine holiday season, but not an extraordinary one. And that gave people a lot of pause heading into 2015.”
Ports Work to Clear Out the Backup
A tentative five-year contract was reached Feb. 13 between the International Longshore and Warehouse Union’s leadership and the Pacific Maritime Association after more than nine months of negotiations.
The deal was reached after a federal mediator failed to get both sides to reach an agreement and President Barack Obama sent Labor Secretary Thomas E. Perez to oversee the talks.
The agreement followed weeks of tension at the 29 West Coast ports from San Diego to Seattle. Owners charged that dockworkers were purposely working slower and withholding the most skilled workers to create a log jam at West Coast cargo container facilities, while the union blamed ownership for the delays because they locked out workers on weekends.
According to the Port of Oakland’s official website, the backlog of cargo containers may not be cleared out until well into March.
“Cargo movement should improve soon, but it will take time to restore full productivity,” the website stated, adding that emergency measures were being taken to expedite cargo movement, including weekend gates, express lanes, additional truck parking and daily status reports for shippers.
Presidential Intervention
The contract between workers and management expired July 1, 2014. Talks between the two sides had been ongoing since May 12 of last year. In January, the US Federal Mediation and Conciliation Service stepped in with the hopes of finding a way to untangle the stalled contract negotiations but when that failed, President Obama called in the big guns.
Both sides were motivated to reach an agreement earlier this month when Labor Secretary Perez threatened to move the talks from San Francisco to Washington, D.C., where negotiators from both sides would be subject to more scrutiny from lawmakers and government officials whose districts were impacted by the labor problems.
West Coast ports handle more than two-thirds of all US retail container cargo and most of the cargo arriving from Asia, so the effects of the slowdown were felt up and down the supply chain and in retail markets.
The last time the ports went dark was in 2002, when strike shut down West Coast ports for 10 days. That created a backlog that took several months to be cleared. That disruption cost the US economy an estimated $15 billion in reported losses.
The ILWU represents 14,000 port workers at 29 ports from San Diego to Seattle.