Update on Port Conditions
I don’t want to be the boy who cried wolf, and I certainly have been ringing the alarm often these last few months. However recent actions at the West Coast port terminals have undeniably put us right on the brink of a complete port shutdown. With all three major ports areas (Seattle/Tacoma, Oakland, Los Angeles/Long Beach) discontinuing longshoremen labor at night to unload containers off vessels, the port conditions will only continue to get worse.
In the past few weeks we have seen the following:
– SSA and BENT terminal in Oakland shut down last Thursday during the day last Thursday due to disagreement between the ILWU and PMA..
– Five strings calling the port of Oakland have been eliminated. This will significantly decrease the capacity coming to Oakland. Those with containers on vessels that eliminated the Oakland port calling will have containers railed to the port of Oakland from the port of discharge.
– Vessels continue to sit at the port of Los Angeles/Long Beach for multiple weeks before departing.
– Containers that are unloaded from vessels have an increased likelihood of being put into a closed area.
– Steamship lines and terminals are in some cases barely extending any free time when containers are put into closed areas.
– Some terminals are refusing to accept empty container returns for extended periods of time.
– For export shipments, some terminals are refusing to accept loaded containers that are ready to be delivered to the terminal. This only acerbates the chassis shortage problem as many of these loaded containers are sitting on chassis that are much needed on the import side. One of our trucking partners indicated to us that they have over 300 loaded export containers sitting in their yard or at their customer’s dock waiting for the terminals to accept them.
I mentioned that the PMA and ILWU agreed to Federal Mediation at the beginning of the year. Mediation was supposed to be accompanied with a news blackout. However both the PMA and ILWU have been trading public attacks leading us to believe that mediation is not working.
My feeling is that the next step will be a complete port shutdown. There’s no where left for the situation to progress to. One local carrier representative mentioned to me that we should pull out from the ports as many containers as we can right now as a shutdown could happen any moment. I found this comment amusing as no one is holding back on pulling out containers. We’ve been desperately trying to get containers out as quickly as possible these last few months. The trucker who has 300 export containers waiting to be returned to the terminal also believes that this situation cannot go on for long.
Monday, January 19th, is MLK holiday. Some terminals are open. Others will be closed. A few will be open in limited capacity only. One less day to pull out containers will not help.
I hope I am wrong about a shutdown, but all signs indicate that we are sitting on the precipice and staring straight at a shutdown.
Report from CBS Evening News: https://www.youtube.com/watch?v=yjWdkoC5Fug.
What alternatives do shippers have?
Many shippers have come to me asking me what alternatives they have.
– If they have the ability to ship to the East Coast or perhaps to Houston, this is an alternative. Note that transit time is long (but perhaps not as long as having to wait it out at the West Coast ports). Furthermore, capacity on vessels to the East Coast is also very tight.
– What about Canada? If you ship to the Midwest, you should undoubtedly be looking at rail through Vancouver or Prince Rupert as an alternative. However for those on the West Coast, is Vancouver really a viable option? The product would have to be removed from the container and transloaded onto a trailer before being trucked to the most locations in the United States. I recently priced this service out with a few various truckers. The current rough estimated cost to get a container of product from Vancouver to the San Francisco Bay Area would be somewhere between $4500 and $5000. There would be some variation depending on the size of the shipment and whether or not the product floor-loaded or palletized. This is a very rough estimate that could certainly change in the coming months/
– What about air freight? This would have to be a last resort as air freight rates will assuredly surge during this time.
We will be watching this situation closely and providing updates as we receive them.
– Jimmy Ting
t: 650-873-9050 x1019