NEWSFLASH – July 1, 2014 www.masterpieceintl.com Terrible congestion at LA-LB With the expiration of the current U.S. West Coast longshore agreement just hours away, truck traffic at the ports of Los Angeles and Long Beach is reportedly slow and congested, making it difficult for many shippers to get containers out of the nation's largest port complex. However it appears the congestion is related to issues such as chassis and not labor actions tied to the negotiations. It’s taking at least 2-1/2 hours for the company’s drivers to get containers out of the two ports because of a chassis shortage, a source at a drayage company told the JOC. The equipment shortage, an issue even under normal circumstances, has intensified in the past month as beneficial cargo owners accelerated shipments ahead of the expiration of the West Coast dockworkers’ labor contract. The contract between the International Longshore and Warehouse Union dockworkers and employers, the Pacific Maritime Association, expires at midnight on Monday, June 30. Negotiations between the two entities have never been free of some sort of disruption, and in 2002 the talks ended in a 10-day port lockout and significant work slowdowns. Peter Friedmann, executive director of the Agriculture Transportation Coalition, reported to CONECT that the vice president of OOCL and the new executive director of the Port of Los Angeles advised that the “terrible congestion” at Los Angeles and Long Beach is chassis- and equipment-related, and not related to any effort by longshoremen to influence the negotiations. “It is only at certain terminals, not at all terminals at those two ports,” Friedmann said. “Unfortunately, those terminals ordered or received the wrong chassis and other equipment, and it will take a number of weeks, perhaps a number of months, before the appropriate equipment arrives. Until then, those terminals will be unable to work in normal fashion, and there will be severe delays.” The timing couldn’t be worse. In the latest indication that shippers accelerated shipments ahead of the expiration of the longshore union contract, containerized imports through Los Angeles and Long Beach, which handle 40 percent of all U.S. trade, rose in May. In Los Angeles, containerized imports, including empties, increased 9.9 percent year-over-year, to 348,512 20-foot equivalent units, and imports at Long Beach were up 3.2 percent to 312,946 TEUs, according to preliminary figures from PIERS, the data division of JOC Group. The growth in May came on the heels of April’s 9.1 percent rise at Los Angeles and 3.4 percent increase at Long Beach. Friedmann said he doesn’t anticipate a new contract between the ILWU and PMA before the existing contract expires tonight, but expects the two sides to continue negotiating until they sign a new contract in mid-July. He expects that contract to be for three years, shorter than the typical three-year pact as both sides wait to see how the socalled Cadillac tax on high-cost health plans — a key component of the Affordable Care Act that is scheduled to begin in 2018 — plays out after the 2016 presidential elections. PMA President Jim McKenna, has said previously that the tax is projected to cost the industry $150 million a year. Employers pay the entire cost of premiums for ILWU medical insurance. Longshoremen pay only a $1 co-pay for medical prescriptions. Friedmann said there may be some disruption at the ports for the Fourth of July holiday and Bloody Thursday memorial, but other than that disruption at the ports will be “fairly minimal.” He stressed that these forecasts are not based on any public statements made by the two parties, who have been silent since issuing a joint statement earlier this month that characterized the talks as continuing without interruption. 2 MASTERPIECE – NEWSFLASH JULY 1, 2014 Another drayage dispatcher at Los Angeles-Long Beach said there are delays at all the terminals. Asked which was the worst, he first said Pier T, but upon consideration responded, “all of them.” According to an account manager at a third-party logistics provider that operates at Los Angeles-Long Beach, the ports have been extending free time for drayage drivers this week, delaying implementation of demurrage fees, which add up to about $100 each day that a container is left in a terminal. But even without additional fees, they’re not getting enough freight out of the ports. “It’s been hard to get our containers out of the terminals,” the account manager said. “Say we have five containers in the yard, we get like one of them. That’s just my account.” A source from a sports apparel retailer, which receives about 60 percent of its imports from Asia, told the JOC that since at least mid-June, its containers arriving from Asia in Los Angeles and Long Beach have been delayed by several days, as drayage truckers are dealing with backups and dry runs. “The dray carrier hasn’t passed those costs on to us yet, but we believe that they will at some point charge us for those dry runs,” the retailer source said. That retailer has seen higher costs from fees associated with PierPass, a program designed to alleviate congestion at Los Angeles-Long Beach by encouraging shippers to move cargo during off-peak hours, the source said, adding the company has had to pay more traffic mitigation fees to access the ports during on-peak hours than normal because they were not able to retrieve enough of their containers during off-peak hours. “For us, one container could have a huge impact because we don’t have other containers with interchangeable product,” the source said. “Sometimes we need them to pull a container in a day, so we’ll pay the traffic mitigation fee.” Bruce Wargo, president and CEO of PierPass, confirmed to the JOC that traffic at the ports has been higher lately, which he attributed to the ongoing labor situation. Representatives from the ports of Los Angeles and Long Beach said that they haven’t seen anything out of the ordinary this month. “Truck turn time issues have been going on for quite some time now,” a Long Beach spokesman said. “The queues are the normal ones. We have not seen traffic congestion other than the normal hiccups.” Contact Grace M. Lavigne at [email protected] and follow her on Twitter: @Lavigne_JOC.
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