February 24, 2015
As everyone is now aware, the ILWU and PMA have agreed on a contract. I have had a number of people come to me in the last two days asking if everything is back to normal. To be frank, I’m not sure if we will ever get back to “normal.” I think it is most important right now to talk about what we can expect in the coming weeks and months.
My prediction is that we will see a very short week of calm (especially in the port of Oakland) before the storm really hits. There is an enormous backlog of vessels waiting to be unloaded, most notably in Los Angeles. Now that the ILWU is back and working in full force and at productivity levels back to what was expected of them before the contract disagreement, how quickly can these terminals and the shipping community process the backlog. There is no question that there are more containers on vessels waiting in Los Angeles/Long Beach than the port can really handle at one time. The same goes for the other West Coast ports.
As the ILWU mentioned a number of times during the contract disagreement, the congestion crisis was also a result of infrastructural issues that the steamship lines must work with terminals to resolve. The flood of containers waiting to be brought into the terminals is only going to exacerbate the infrastructural issues. We saw a number of terminals close various container storage areas for days, if not weeks, during the crisis. We should expect this issue to continue to be a problem. We saw containers unable to be picked up due to chassis shortages. This may also continue to be a problem.
Importers should not expect a quick return to immediate container availability once a container gets off a vessel. While they may see this temporarily, my feeling is that it is only a calm before the full force of the vessel and container backup hits the terminals in coming weeks.
While vessel transit times should be slowly speeding up, they will not immediately return to pre-congestion time tables. We will likely have to wait months for the transit times to very gradually get back to a predictable number of days. The same goes for vessel sailing schedules. The shipping community has become accustomed to weekly sailings on designated days by various steamship lines. We should be ready carrier schedules to be off kilter for a good amount of time.