An aerial view of containers and cargo ships at the Port of Los Angeles on January 19, 2022 in San Pedro, California.
Qian Weizhong | China Visual Corporation | beautiful pictures
Pacific Alliance no longer accepting exports or empty containers at the Denver rail terminal for the Port of Los Angeles, a proactive move that reflects supply chain issues arising from West Coast port labor issue.
By halting rail freight, shippers can find other ports to send their goods to instead of leaving them sitting in containers for long periods of time before reaching their intended destination. That’s important for food and agricultural shipments, where produce can spoil — the U.S. agricultural industry primarily uses the West Coast for its goods.
The Port of Los Angeles is the nation’s busiest port, handling $440 billion in cargo value each year. That market share has decreased with many trade moves to the east coast over the past year, at least in part because labor problems on the West Coast have supply chain management worries about service reliability.
According to CNBC’s sources, these latest problems have arisen because full-time workers working on rail shipments are not reporting at union halls.
Ocean carrier CMA today sent an email to customers obtained by CNBC to inform them of Union Pacific’s decision.
“Union Pacific has issued an order to halt shipments from our domestic terminals to three terminals at the Port of Los Angeles and Long Beach, where we see some cargo starting to accumulate. My job with this short-term pause is to ensure rail lines to and from ports remain smooth,” a Union Pacific spokesperson told CNBC in a statement.
Berkshire Hathaway subsidiaries BNSF and Union Pacific are railroads serving West Coast ports.
“This is the ripple effect that we are concerned about,” said Paul Brashier, vice president of transport and intermodal at ITS Logistics. “US exports of protein and other products will begin to return at domestic ports. This will reduce rail productivity due to increasing container congestion.”
Negotiations between the coast workers union ILWU and the Pacific Maritime Association (PMA) continue as scheduled this week, CNBC reported. The topic of salary is still being discussed. The negotiations are under the cloud of slow port productivity. ILWU and PMA did not comment, citing media loss.
West Coast ports opened on Monday after several closures starting at the port of Oakland Last Friday, when some union workers refused to report duty, however, problems persisted at select terminals in ports from Los Angeles to Seattle, with slow labor back and close the shift.
Truckers told CNBC they are still experiencing a “snail productivity rate” at the terminals. Data from various CNBC Supply Chain Heatmap data providers also shows delays.
ITS Logistics told CNBC that its truck drivers were turned away by port operator Fenix Marine Services, owned by ocean carrier CMA-CGM, at the Port of Los Angeles during its first shift on Monday. . They are picking containers from multiple ocean carriers. Containers handled through the terminal include those owned by MaerskOOCL, COSCO Shipping, Sealand (a Maersk company) and Evergreen.
Forty-five major commercial vessels are currently en route to Los Angeles, expected to arrive within the next two weeks, according to tracking data from MarineTraffic, with 18 of those vessels expected. will arrive within the next 5 days. Adil Ashiq, North America Head for MarineTraffic, told CNBC that a solution needs to be addressed to reduce port productivity and it is important to avoid aggravating supply chain problems that will affect both consumers and businesses.
“The reduction in labor means a reduction in the ability to operate boats and bring them back to the open sea,” Ashiq said. “With the current situation unfolding, the port of Los Angeles will experience a pandemic-like crisis where ships will fill up their berths, waiting to arrive at the docks to unload their cargo, once again causing a traffic jam. obnoxious congestion at one of the largest ports in the United States.”
Logistics companies that have truckers on the ground told CNBC at several ports that they are slowing down.
“Today, we still see significant congestion at most stations in LA,” Brashier said. “Drivers are experiencing long wait times to get into the station and get serviced at the station.
“As our West Coast ports are no longer reliable, agricultural exporters have become unreliable suppliers,” said Peter Friedmann, Executive Director, Agricultural Transport Alliance (AGTC). reliable because our export hubs to the West Coast had to suspend service.”
Overall, West Coast ports have lost trade to East Coast and Gulf Coast ports. CNBC tracked container volumes at the ports of Los Angeles, Long Beach, Houston, New York, and Savannah.
Waiting times for containers out of the ports of Los Angeles, Long Beach and Oakland continue to increase. This is another physical indicator of a slow moving trade.
Jenna Slagle, senior data analyst, marketing for Project44, said: “The backlog of shipments at the port is predicted to lead to longer rail stop times and create chaos in the industry. trucking industry as drivers navigate between clearing older shipments and prioritizing high-priority shipments.” . “Furthermore, as docks reopen after labor disruptions, there is likely to be equipment shortages, especially chassis and yard capacity constraints as they work to address backlog.”
Giving an example of bottlenecks affecting the supply chain, Ashiq highlighted the container ship MSC JEONGMIN, which was unloaded in Oakland on May 31. Based on waiting times for containers to leave the port, products products in these containers are still at the port.
The majority of the items listed in the 320 containers included were all Canadian-sourced goods, including things like fresh apples and lentils, as well as frozen fish, poultry and meat, according to the data. customs analyzed by ImportGenius.
The vessel has been unloading at the ports of Los Angeles, Seattle and Oakland. Product includes tire for Tesla cars, IKEA furniture and Trader Joe’s Petite peas from Portugal. It also includes hundreds of containers filled with wine from Europe, as well as porcelain tiles and granite slabs.
“The situation at the Port of Oakland is not good,” said Ashiq. “The port operates on a first-come, first-served basis, meaning that ships are given priority to line up depending on arrival time. What we’re seeing is a mooring area that hasn’t been as busy since. at least March of this year, with the number of boats moored waiting almost twice as much as at that time.”
According to MarineTraffic data at press time, six ships are waiting offshore and seven are currently moored. Reports of port mobility among truckers are good news for logistics companies known as 3PLs that manage shipments for companies.
“In Oakland, conditions have improved a lot since closing last week, which is good because we have a backlog of imported containers to tow and export,” Brashire said. to the border for our customers.”
Robert Bernardo, director of communications for the Port of Oakland, told CNBC that its marine terminals are back up and running and the port is “making great progress with its backlog after closing for the weekend.” .”