Dear friend,
Thought you might be interested in what is happening with the labor disruptions at the West Coast ports.
Over the last several days, we’ve learned that members of the ILWU are taking actions to slow down operations at critical ports.
What Does This Mean for Shippers
On the immediate side, shippers should identify which containers/orders are on the water heading for the West Coast ports. They should also identify which containers/orders are scheduled to be in transit to the West Coast ports over the next 30 to 60 days. To keep things brief, we have prepared a “To Do” checklist of other items that should be considered should the situation at the West Coast ports continue to escalate. If you’d like a copy of this checklist, send me an email.
This situation serves as another important reason why conducting a supply chain risk assessment is so important. If you or your team would like more information about what that would look like, feel free to give me a call. I’d be happy to talk to you via Calendly or send me an email.
Background of West Coast Port Negotiations
As a point of reference, the contract between the PMA and the ILWU expired on July 1, 2022. For the past year, we have been warning shippers that the absence of a contract between the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union (ILWU) could eventually have a significant impact on shippers. It looks like eventually has finally arrived.
During the past twelve months, we have attended events where we heard from the heads of the ports at Los Angeles and Long Beach, hosted numerous webcasts and interviews with various ocean experts from the Journal of Commerce such as Peter Tirschwell, Vice President, Maritime & Trade, and Mark Szakonyi, Executive Editor, and talked with several senior executives from the ocean industry.
What we learned from these interviews and webcasts was a sense that as long as both parties agreed to keep the ports open and functioning during their ongoing negotiations, shippers would be OK. But we also learned that the longer the negotiations went on, the greater the risk that there would be targeted labor disruptions that could slow down or effectively shut down port operations.
As you can see from the following articles listed below, it looks like some of the members of the ILWU have effectively said “enough is enough.”
Here’s a little secret that I learned when I toured the Port of Long Beach and spoke with their senior executives a couple of years ago: It doesn’t take a lot of effort to disrupt a port and slow down the velocity of containers moving through the ports. The ILWU knows how to hurt port productivity without having to go on strike. That is what we are currently seeing.
Here are some recent articles about the situation.
One other important note that we are monitoring on the ocean front is how drought conditions are affecting traffic through the Panama Canal. This could have an impact on the length of time it will take to get containers from Asia to the East Coast ports.
If you have any questions, please get in touch. In the meantime, we will continue to monitor the situation and keep you posted.
All the best,
Mike
