Photo taken at the Fenix Marine Services railway station on June 8, 2023, taken by a truck driver.
The “slow and go” pace of the International Longshore and Warehouse Union workforces at West Coast ports has slowed ground port productivity. As a result, supply chain intelligence firm MarineTraffic data shows what it calls a “significant increase” in the average number of containers waiting outside port limits.
At the Port of Oakland, during the week of June 5, the average TEU (ton equivalent) waiting outside the port increased to 35,153 from 25,266, according to MarineTraffic. At the ports of Los Angeles and Long Beach, California, the average number of TEUs waiting outside the port increased to 51,228 from 21,297 last week, a MarineTraffic spokesman said.
The total value of the 86,381 containers floating off the ports of Oakland, Los Angeles and Long Beach reached $5.2 billion, based on $61,000 per container and customs data.
According to data exclusively available to CNBC by Vizion, which tracks container shipments, the seven-day rate for a container to clear through the Port of Oakland is operating at 58%; at Long Beach port is 64%; and at the Port of Los Angeles 62%.
“Our data shows that vessels will continue to arrive at West Coast ports in the coming days with significant cargo to unload,” said Kyle Henderson, Vizion CEO. There is currently no indication that ocean carriers plan to cancel any sailings to these ports, he said, but he added, “If these labor disputes continue to affect port efficiency, we could see a backlog similar to what we experienced during the pandemic, obviously, that’s the last thing any shipper wants as we enter the second half year and Peak season.”
Logistics managers knowledgeable about union ratings and records are unhappy with unresolved issues in negotiations with port management that are affecting shifts told CNBC. that the slowdown could be due to skilled labor not coming to work. CNBC has also learned that in select docks, requests for additional work are made through formal work orders that are not placed on the wall of the union hall for fulfillment. The Pacific Maritime Association, which negotiates on behalf of the ports, is not allowed into the union’s halls to see if terminal orders are actually being requested. CNBC has been told that if additional job postings are posted, the data will show they are not filled. Only original labor ordered from PMA will be filled.
The PMA said in a statement Friday afternoon that from June 2 to June 7, ILWU at the Port of Los Angeles and Long Beach refused to send cargo guarantors for transpacific and transpacific voyages. Dismantle the goods after the ship arrives. “Without this vital function, ships would be inoperable and unable to load and unload cargo, leaving U.S. exports at the docks unable to reach their destination,” the statement read. “ILWU’s refusal to send spanners is part of a broader effort to keep necessary labor off the docks.”
The PMA said Wednesday morning it failed to complete 260 of the 900 jobs ordered at the Port of Los Angeles and Long Beach, and in total, 559 shore workers who signed up to the dispatch room were fired by the union from denied employment opportunities, the PMA asserted in its statement.
“Each shift with no active mooring lines results in more ships not working, occupying the berth and causing redundancy of incoming ships,” it said.
However, the PMA said ILWU’s decision to stop deducting labor has allowed ports at the Port of Los Angeles and Long Beach to prevent, for now, “a domino effect that could lead to redundancies not seen since.” supply chain crisis last year.”
The PMA cited “generally improved” operations at the Ports of Los Angeles, Long Beach and Oakland, but at the Ports of Seattle and Tacoma, the continuation of “significant slowdown”.
ILWU declined to comment, citing the media loss during the ongoing labor negotiations.
Backup of trucks and containers
On average, each truck in and out of Western seaports has increased.
A truck driver waiting for a container at LA’s Fenix Marine Services terminal shared photos from their truck with CNBC showing congestion on both rail and road where drivers truckers waiting to pick up their containers.
Shippers are increasingly concerned about the potential demand in finding alternative supply chain options.
A spokesperson for Long Beach, California-based Cargomatic, which focuses on trucking and short-haul logistics, said it has not yet noticed a commercial diversion, but added: “As a partner For national freight, we’ve built contingency plans in line with our ability to serve our customers anywhere in the United States. We know shippers are worried. and it’s only a matter of time before they rotate if this situation persists.”
The PMA said in its statement that while some port operations have improved, “repetitive actions that disrupt ILWU’s work at strategic ports along the West Coast are increasingly causing the company redirects cargo to more reliable and customer-friendly locations along the Gulf Coast and East Coast.”
West Coast ports, which have lost significant volumes to East Coast ports over the past year due to volatility in labor contract negotiations, have in recent months begun to increase volumes again.
This image of a truck parked at the Fenix Marine Services terminal in the Port of Los Angeles waiting to pick up a container was taken by a truck driver.
Sea freight intelligence firm Xeneta says its data shows spot container freight rates increased by 15% in the first days of June due to several concurrent disruptions. The recent low water level of the Panama Canal restricted cargo throughput, and shortly thereafter, most US West Coast ports stopped handling inbound and outbound container trade.
“Shippers looking for more reliable and flexible supply chains are now looking at their options,” said Peter Sand, principal analyst at Xeneta. “The longer this goes on, the more severe the consequences will be for shippers and ports,” he said.
During Covid, supply chain problems caused ships to pile up waiting off the West Coast affect trade to move to Gulf and East Coast ports. If ships begin to divert again, there will be additional costs incurred for the goods being transferred and to be borne by the shipper. If ships are diverting and heading to Gulf or East Coast ports, they must use the Panama Canal, where surcharges are added to the usual additional charges because the Panama Canal is in jeopardy. supply with lower water levels due to drought.
Routes for the monthly long-term ‘roaming’ from Asia to the Americas
— Core trade route — alternative route
The Panama Canal’s water problems exacerbate the costs that would arise in any trade route. It placed weight requirements on ships — they needed to be lighter to move through. If the vessel is at or below that weight requirement, an additional fee will be charged to the shipper. In addition to the canal fees, some ocean carriers such as Hapag Lloyd have charged a $260 container fee to pass through the canal. CMA CGM is charging $300 per container. If the ships were heavier than currently required, they would be forced to cross the Pacific and circumnavigate South America, which would add weeks of travel time and travel costs.
“Ship diversion is one of the most challenging operations that shippers and our customers have to deal with in times of crisis,” said Paul Brashier, vice president, freight and intermodal, ITS Logistics said. During the pandemic and its aftermath, he said, containers arriving in Los Angeles or Long Beach will show up unannounced in Houston or Savannah with little or no notice. “We have apps that show us alerts before the container arrives so we can reassign trucking capacity at the new port. But if you don’t have this visibility, what if you don’t have this visibility? If you can’t track such containers in real time, you could face thousands of dollars in shipping and D&D costs per container to accommodate those changes. bad for the shipper but also for the consumers of those goods,” he added.
its logistics raise the freight rail alert level to “red” This week, signifies a serious risk.
Supply chain costs have dropped significantly on a global basis, according to Federal Reserve data, although they have been mentioned by Fed Chairman Jerome Powell as an inflationary driver that the central bank has no control over. In a report by Georgetown economist Jonathan Ostry, the spike in transportation costs has increased inflation by more than two percentage points in 2022.
“This slowdown leaves few options for shippers whose containers are en route to the West Coast,” said Adil Ashiq, head of North America at MarineTraffic. “breaking the normal.”
“They can skip one port and go to another on the West Coast, but they’re all experiencing some degree of congestion,” he said Friday. “So do they wait or divert and go to Houston as the next nearest port to unload?”
If ships decide to reroute, their journey will add more days, which will delay the arrival of the product even more.
For example, if a ship arriving from Asia decides to reroute to Houston, it will add another 7 to 11 days’ journey to the Panama Canal. If a ship is allowed to pass through the canal, the transit time will be extended by 8-10 hours. “Then you have to add travel time out of the canal to port. So we’re looking at it conservatively, an extra 12 to 18 days of delay if a ship decides to go straight to Houston. from the Canal. Even more, if you have to go around South America,” he said.
Key sectors of the US economy have begged the Biden administration to intervene and broker a labor deal, including trade groups for the retail and manufacturing sectors. On Friday, the American Chamber of Commerce added its voice to the effort, voicing concern about “severe work disruptions” at the ports of Los Angeles and Long Beach that could put the economy at risk. US economy loses nearly half a billion dollars every day. It estimates a more widespread strike along the West Coast could cost about $1 billion a day.
“The best outcome is an agreement reached voluntarily by the negotiating parties. But we fear the current bottom line – the deadlock on wages and benefits – will not be resolved,” said the director. American Chamber of Commerce executive Suzanne Clark wrote in a letter to President Biden.
