NOW WHAT

What a masterful accomplishment in apparently ending the labor dispute at the West Coast ports. The Administration sends out the Secretary of Labor and all of a sudden everything solved. Was this a stroke of genius? I think perhaps that the impact on the US economy and the revelation of what the dock workers are paid, how much they actually work and what their productivity is on international standard, was beginning to hit the headlines.

Of course the Administration's voter base is very much with organized labor, but perhaps the embarrassment was starting to take its toll. So now just what we have is that negotiations that have been going on for many months are now solved with very minor tweaking of the basic agreement that was already subscribe to.

Most people cannot imagine working roughly 1000 hours a year for an average pay of $150,000 (on average), with full health care and the pension that is extremely generous.

Do not get me wrong, these are good people and they have only receive the benefits that they have worked for over the years. What is sad is that the employers have little vision and have given in over several decades and now find themselves continuing to pay the piper.

Most of the containers from United States to Asia are empty and those that carry cargo are full of, mostly, raw materials such as rags and remnants, scrap paper and the like. The ocean freight for this group of raw materials, depending on the season, can run from $250-$500 per container. The cost of moving these same containers the 300 or 400 yards from the terminal to the ship is in the area of $450-$600 per container. Now why would a shipping company do something like this? It is kind of like being at a bus stop and the bus stops at your feet and you see the buses only half full and so you say to the bus driver, "you are going my way, the bus is mostly empty, so why can I ride it for free?"

If the general public only knew the "nitty-gritty" of what really was going on in this industry there would be an uproar!

Los Angeles - Long Beach Terminal and Congestion Impact Update

Congestion issues impacting port productivity in LA/LGB have been well documented and are impacting everyone in international trade.  Many of you are acutely aware of how these delays have affected your own supply chains, as you struggle with container availability delays for local deliveries as well as significant delays transferring containers to/from rail terminals.  In addition, while the conditions we face in Southern California are the most severe, they exist elsewhere in the country as terminal congestion, chassis dislocations, and driver shortages are affecting productivity throughout the country.  The range of issues is significant, making it difficult to predict when operations will return to "normal," or in fact, what "normal" will looks like moving forward.

 

Below, an outline of how Port Operations is impacting trade in North America, potentially through the end of 2014.

 

Terminals are running close to or at full capacity, which creates delays unloading/loading vessels:

We have heard from some terminals that even parking lots are now being used to store containers.  The delays are becoming significant enough that we also are seeing vessel berth dwell times 2-4 days beyond normal, anchoring of vessels outside terminals waiting days for available berth times, and the possibility of vessels being rerouted to discharge in Oakland.

 

Truckers have begun to charge congestion surcharges:

In LA/LGB and Oakland it is typically between $100.00 and $500.00 per container as they face significant dwell times waiting for chassis and container availability - despite having terminal appointments.  We have also experienced trucking companies refusing additional work, even for their existing customers. Most are already at full capacity.

 

Congested Terminal Conditions Effects Container Handling:

As terminals try to operate safely and efficiently in such congested  conditions, they are frequently relocating and stacking containers in areas that make them temporarily off-limits. This creates situations where containers are more frequently "unable to be located" which impacts both the availability for drivers and trade.  Containers have gone "off the grid" causing a significant delay, up to 20 days in the worst cases.

 

Carriers' Performance Impact:

Significant terminal congestion is impacting carriers' ability to perform "on-dock" rail moves, and so consequently more and more containers have to be transferred to off-dock rail terminals - an operation that requires both chassis and drivers which are both in short supply.  We have experienced some IPI and MLB containers being delayed 10-15 days due to carriers' inability to get both drivers and chassis for this transfer. However, it is also important to note that despite these critical issues, a majority of volume, moving IPI, is moving with only delays of 6-7 days.

 

Effects - More Demurrage and Missed Appointments:

Some terminals are assessing demurrage as per their tariff.  Once demurrage is either paid or guaranteed, truckers will then be able to obtain an appointment, but when the congestion is so severe we find that too often the driver misses the appointment, then the process must start again, causing potentially additionally 2-3 days delay, depending on the terminal.

 

Congestion on the West Coast Effects the entire USA and North America:

As you have read in our past notices, the industry-wide issues caused by larger and larger vessels, new carrier alliances, chassis dislocations, surges in volumes, driver shortages, labor shortages, and terminals not being able to collectively discuss solutions without FMC regulatory approval, are all structural and will not be solved easily or quickly.

 

-Provided by James De Arruda