Labour slowdowns at West Coast port terminals, specifically the Port of Los Angeles and Long Beach, have caused an increase in the number of vessels waiting to dock, impacting supply chain operations, as reported by CNBC.
Stressed supply chain
On a recent Wednesday, six vessels were delayed at the Port of Los Angeles, while two vessels at the Port of Long Beach were unable to interface with port operations and had to anchor upon arrival. This indicates a shift from isolated vessel problems to a more widespread issue. Over the past 2½ months, vessels have been experiencing average wait times at anchorage ranging from half a day to 1½ days, with service time averaging between two to five days. At the APL Terminals in LA, docked vessels are now occupying space for up to nine days, indicating a stressed maritime supply chain. These delays prevent the loading and unloading of vessels, which is crucial to make room for the next wave of vessels heading to Los Angeles. As a result, both imports and exports are sitting idle, causing a ripple effect throughout the supply chain.
Labour issues
Labour issues at West Coast ports, such as the Port of Los Angeles, are starting to affect ocean operations, as illustrated by the case of the MSC Jeongmin. This vessel, carrying various products including Tesla tires, Ikea furniture, Trader Joe’s food, European wine, porcelain tile, and granite slabs, departed from the Port of Oakland on May 31. However, it encountered delays and circled for a day before reaching the Port of Los Angeles on Wednesday. Upon arrival, it was turned around and rescheduled for later in the day. Other vessels, such as the CMA CGN Lyra, CMA CGM Amerigo Vespucci, YM Unicorn, and One Hangzhou Bay, have been docked at the Port of Los Angeles for several days, further contributing to container congestion. These delays not only impact the container deliveries at the affected ports but also cause a ripple effect, affecting the container flow and contributing to congestion at other ports as well. The container congestion issue was particularly severe during the Covid pandemic.
Backlogs and delays
The labour issues causing delays at West Coast ports are now impacting Oakland, where the CMA CGM Amerigo Vespucci is scheduled to dock. Shutdowns resulting from labour problems in Oakland last week have caused a backlog of vessels, leading to delays in container arrivals. These developments are occurring during the peak inventory build season, which spans from July to October and precedes back-to-school and holiday seasons. Despite the economic environment and slowing consumer demand, West Coast ports have been regaining volume previously lost to East Coast ports due to the uncertainty surrounding ongoing labour negotiations. On Thursday, the executive director of the Port of Los Angeles, Gene Seroka, acknowledged the spot shortages in labour, emphasizing the need for cargo to move smoothly and quickly. The trucking industry is particularly affected by these delays as they transport the majority of cargo from the ports. Efficient port operations are crucial for both trucking and rail industries, as delays in container movement impact ground transportation. Import container activity has shown improvement, but export processing remained high on Wednesday. Union Pacific temporarily halted its ramp activity at California ports, although the pause was lifted on Wednesday. However, ITS Logistics raised its freight rail alert level to “red” this week, indicating severe risk.
Retailers and manufacturers urge Biden to intervene
The National Retail Federation and the National Association of Manufacturers have both called on the Biden administration to intervene in the labour negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association, representing West Coast ports. The National Association of Manufacturers specifically described the current port conditions as “closed or significantly disrupted” and requested government intervention. These trade groups have expressed concerns about potential inflationary spikes due to supply chain disruptions. However, overall global supply chain costs have significantly decreased from their peak during the Covid pandemic, according to the New York Fed’s global supply chain index. Although vessel delays have increased recently, they are not comparable in magnitude to the parking lot-like congestion experienced during the height of the Covid crisis at ports.
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Source: CNBC
