What's Going On?
For over a year, contract negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) have been at a standstill, leaving the ILWU working without a signed contract since July 2022. Recent developments have seen the ILWU staging disruptive work actions at major West Coast ports, leading to operational shutdowns and severe impacts on cargo movement.
Last Friday, the ILWU staged “concerted and disruptive work actions that effectively shut down operations at some marine terminals at the ports of Los Angeles and Long Beach,” said the Pacific Maritime Association (PMA), the group representing the terminals in the labor negotiations. The ILWU staged “similar work actions that have shut down or severely impacted operations at the ports of Oakland, Tacoma, Seattle and Hueneme,” said the PMA.
Essentially, West Coast port workers are asking to be compensated commensurate with the pandemic profits made by ocean carriers.
Things are OK...For Now...
Fortunately, this week, there were signs of cargo flow resuming at the ports of Los Angeles and Long Beach, except for the temporary closure of TTI, one of LA's main terminals. While this may provide temporary relief, it is important to note that the underlying labor disputes remain unresolved. The risk of further disruptions persists, and the reliability of West Coast ports continues to be a matter of concern.
Adding to the complexity, members of the ILWU in Canada are expected to vote on whether to proceed with a 72-hour walk-out at the ports of Vancouver and Prince Rupert. Should this walk-out occur, it could exacerbate capacity issues on the East Coast ports. Notably, a significant amount of Canadian West Coast cargo is transported by rail across the continent, which may strain the capacity of U.S. East Coast ports if imports are redirected to avoid potential disruptions.
Are My East Coast Shipments Safe?
As labor disputes persist on the West Coast, shippers may consider alternative routes and shift their imports to the U.S. Gulf and East Coast ports. While this may seem like a viable solution, it comes with its own set of challenges. The sudden influx of cargo to East Coast ports could lead to tightened capacity, potentially causing delays and congestion. Moreover, the increase in demand for East Coast port services may prompt a surge in spot market rates, placing additional financial pressure on businesses.
What Should I Do?
There's not an easy way for your freight forwarder to shield you of these issues. Unfortunately, supply chain is messy. However, work with your freight forwarder to ensure that you are considering ALL alternative routings.
Beyond that, if spot market rates rise and that happens to coincide with an inventory replenishment surge, committed space and fixed rates with your freight forwarder will be essential.
As always, having an consultative relationship with your freight forwarder will always help you sleep more soundly at night.