What Happens if West Coast Port Disruption Drags On
After a weekend marked by disruption at major West Coast ports when dockworkers didn’t show up to work, the Port of Long Beach‘s largest terminal remained closed Monday, with a second also shutting down later in the day.
Total Terminals International (TTI), one of the Port of Long Beach’s six container terminals, decided to close “based on its own operational needs,” a port rep confirmed to Sourcing Journal.
More from Sourcing Journal
Amazon Terminates Union Organizer: 'I Will Not Be Silenced, We Will Not Be Stopped'
West Port Labor Talks on 'Doorstep of a Tentative Agreement'
On early Monday morning, the rep said that the remaining terminals at the gateway were open, and that “cargo is moving.” But by 11 a.m. PT, the 256-acre Pacific Container Terminal (PCT) at the Long Beach port’s Pier J had closed, the rep said. The terminal, owned by SSA Marine, will also be closed Tuesday.
TTI initially told truckers Sunday it will close for Monday’s day and night shifts, according to an email obtained by CNBC. But in a later statement, the Long Beach port said both TTI and PCT will open for evening shifts on Monday. Day shifts typically operate from 7 a.m. to 5 p.m. PT.
Both the Port of Los Angeles and the Port of Oakland confirmed that their marine terminals were operational on Monday, with L.A. saying there have been no reports of labor shortages at any terminals.
The disruption comes amid dockworker contract negotiations in progress since the previous labor agreement expired on July 1, 2022.
In April, the International Longshore and Warehouse Union (ILWU), representing 22,000 workers at 29 West Coast ports, had reached a tentative agreement on some key issues with the Pacific Maritime Association (PMA), which is negotiating on behalf of 70 ocean carriers and terminal operators. But they haven’t been able to agree on wages and worker safety improvements, with both sides broadly agreeing not to speak with the media about the talk.
Currently, the Long Beach disruption shouldn’t really affect incoming ocean freight. Three vessels are currently docked at TTI, all of which arrived after Friday. Two ships are owned by container shipping giant Mediterranean Shipping Company (MSC) and another by Hynduai Merchant Marine (HMM). The ships are not expected to depart until at Thursday at the earliest, according to the terminal’s vessel schedule.
More of the immediate impacts would be felt on the trucking side. Any import load set to be picked up out of TTI that had an appointment for Monday will be rescheduled. Additionally, empty containers initially destined for TTI will now be redirected to another terminal, according to a LinkedIn post from Ian Weiland, chief operating officer at Long Beach-based trucking company Junction Collaborative Transports.
How long-term ramifications could play out
While the port disruption appears to be temporary, by the ILWU’s suggestion, the closures would be a significant problem is they dragged on.
For one, the West Coast could see vessel queues swell to 2015 proportions, when labor disruptions led to a backlog 40 ships deep, according to Lars Jensen, founder of Sea-Intelligence and CEO of container shipping consultancy Vespucci Maritime.
“If a queue builds up of vessels, then we will see congestion issues once operations revert to normal and a surge of cargo is offloaded,” Jensen said in a LinkedIn post. “It can hamper both pickup and drop off of containers, leading to added detention and demurrage disputes between shippers and carriers, not to mention the impact on truckers.”
Jensen also noted shippers might shift even more cargo to the East Coast, and look at re-routing through Canada and Mexico.
“A shift to the East Coast is hampered by the low water levels in the Panama Canal which is reducing the effective carrying capacity on this routing,” Jensen said. “This can cause a temporary shift to more capacity used on the Suez-routings which in turn will help carriers absorb some of their excess capacity.”
The National Retail Federation (NRF) urged the Biden administration to intervene and help dockworkers and employers finalize a new contract. In March, the NRF led a group of 238 trade associations that sent federal authorities a letter asking the government to move the negotiations forward.
“As we enter the peak shipping season for the holidays, these additional disruptions will force retailers and other important shipping partners to continue to shift cargo away from the West Coast ports until a new labor contract is established,” said David French, senior vice president, NRF, in a statement. “It is imperative that the parties return to the negotiating table. We urge the administration to mediate to ensure the parties quickly finalize a new contract without additional disruptions.”
