seattle

State of US West Coast Shipping Heading into the Chinese New Year

As we close out the month of January, I think it is extremely important for those who ship into and out of the U.S. West Coast ports to have a clear outlook of what to expect in the following months. Chinese New Year is on the horizon (February 18th) and is already impacting the shipping industry.

West Coast Terminal Congestion
Los Angeles and Long Beach ports continue to be a bottle neck. Vessels anchor outside the port waiting to be worked on and when they are worked on, it is taking over a week for the work to complete. Vessels are overall averaging two weeks or longer in Los Angeles/Long Beach. Many steamship lines have taken to “drifting” their vessels as they sail towards Los Angeles/Long Beach, as there is no point in rushing the vessels to the port if the vessels are expected to anchor and wait to be worked on.

I have heard rumors of customers paying massive amounts of demurrage / storage charges in Los Angeles / Long Beach, with one customer telling me they had a bill from their freight company for over $40,000 in demurrage fees and another customer mentioning a bill of over $30,000. I’m not sure how accurate these stories are, but they are an example of what many importers are facing as they fight to get their containers at the port. Importers are not just fighting to get containers out, but also fighting the terminals/carriers over demurrage charges.

While Oakland continues to face similar congestion, the port at least was able to go one week without a terminal closure incident. Various truckers are still refusing to go into the problem terminals, in particular SSA Terminal. However we did notice that containers arriving at Evergreen’s BENT terminal this week were able to become available for pick up within a day or two after coming off the vessel. This was a great improvement over previous weeks when we would routinely see containers be placed in closed areas for roughly a week after coming off the vessel.

Are any vessels still planning to come to Oakland?
Due to the delays in LA/LB, carrier sailing schedules are no longer able to follow predictable weekly sailing patterns. In order to try to get vessels back on schedule, many carriers have eliminated calling second ports along the West Coast. For example, Oakland has seen a drastic reduction (at least five strings have been eliminated). I have heard other carriers also are discussing whether or not to remove Oakland as a port calling. One carrier representative explained to me that the cost of sending a container from Los Angeles/Long Beach to Oakland via rail was cheaper than sailing a vessel to Oakland and having it wait at the port to be worked on. It is no coincidence then that more carriers are also discussing dropping Oakland as a port calling.

Are there any vessels to pick up containers in Asia before the CNY?
One carrier representative advised me yesterday that space on vessels departing from Asia is completely booked up through the month of February. This is due to a combination of reasons:

  • The usual surge of product departing from China before the CNY.
  • The fact that most vessels are stuck on the West Coast waiting to go back to Asia.
  • Despite the lack of vessels and abundance of cargo, carriers are still planning on skipping a week and having a “blank” sailing after the CNY.

PMA-ILWU Contract Situation
I do view the fact that Oakland went a week without a labor stoppage as a sign that the contract negotiation is finally moving forward. Assuming the two sides don’t have any massive arguments in the coming week, there is room for optimism that a contract may finally be agreed upon.

Nevertheless, even when the PMA and ILWU agree on a contract, it is going to take months to unwind ourselves from this mess at the ports.

If you have space confirmed with a carrier, I highly recommend that you don’t mess around with it. I have had various importers and exporter come to me complaining about the listed transit times on containers that we have booked. In light of the vessel availability situation, the top priority for every importer should be just getting product out during the month of February.

Let me know if you have any questions.

-Jimmy Ting
Great World
jimmyting@gwlcorp.com
t: 650-873-9050 x1019

Crisis at West Coast Ports

BREAKING NEWS Update: 5pm, November 7, 2014

Los Angeles / Long Beach – 4 of 11 terminals shut down today due to ILWU walkout

Oakland – SSA Terminal shut down today at 2pm due to ILWU walkout

I would be surprised to see longshoremen working on Monday. Let’s keep our fingers crossed and hope for the best.

_____________________________________________

For months now, importers and exporters at U.S. West Coast ports have been dealing with massive congestion that has only gotten worse during the peak season. There are quite a few articles written recently detailing the numerous contributing factors that have led to the current logjam at the ports. Of these factors, the one that now threatens to tip the ports from massive congestion to complete standstill is the ILWU – PMA contract stand-off.

The ILWU has been working without a contract since July 2014. The ILWU and PMA have maintained press silence since that time. However the PMA broke the silence when they announced earlier this week that the ILWU was purposely slowing down productivity in the Pacific Northwest ports (Seattle / Tacoma). This slowdown purportedly began last weekend.

What is more dangerous, if what we are hearing is true, is that similar slowdown tactics have spread to Los Angeles / Long Beach terminals in recent days. Los Angeles / Long Beach terminals are already on the verge of collapsing under the weight of all the containers they are trying to process. We already have seen regular vessel delays in Los Angeles of at least a few days for each vessel.

The greatest fear right now is that if the slowdown does spread, the PMA and terminal operators may feel that they have no alternative but to lock out the ILWU. This would lead to a disastrous port shutdown, similar to the one experienced in 2002.

Importers and exporters are advised to ship with extreme caution and understanding of the fragility of the current situation at the U.S. West Coast ports. Those who have the option to ship via other ports would be wise to begin doing so until this current unrest settles.

The situation is one that may be changing daily. I will keep everyone updated. Let’s keep our fingers crossed and hope for the best.

-Jimmy Ting
Great World
t: 650-873-9050 x1019
email: jimmyting@gwlcorp.com