Many industry analysts are now saying that congestion at the U.S. West Coast ports, in particular Los Angeles/Long Beach will persist well into 2015. Some shippers are reporting delays of 2-4 weeks to move containers through the port and onward to their inland destinations. Some retailers are now noticing an effect on stock levels, with fitness retailer Lululemon estimating that the port problems will cost it $10 million this year. Additionally, U.S. agricultural exports have been hurt as some shipments are arriving in Asia spoiled and unusable. The port congestion is the worse since the dockworkers strike back in 2002 and is result of a perfect storm of issues:
Labor Problems: The Dockworkers have been working without a contract since July. At first things continued on pretty much as normal while negotiations continued, but in the last two months slowdowns have occurred.
Chassis Problems: Ocean carries stopped supplying wheeled chassis for road transport of containers at U.S. ports this year (N. America was the only place in the world where the ocean carriers still supplied the chassis). This has resulted in truck carriers or third parties having to step in and supply the chassis, with truckers often having to return empty chassis to the terminal they originated from. Interested parties are working on establishing a ‘grey pool’ which would allow chassis to be used and mixed freely at any port terminal, which should help this problem in the future.
Rail Congestion: The railroads have had to deal with increased traffic of all sorts across their systems with the result being a shortage of crews and/or locomotives to move intermodal trains out of the port areas on a timely basis.
Larger Ships: Ocean carriers are deploying larger than ever container ships. Ships previously held 8,000 TEUs (twenty foot equivalent units) and now hold 13,000 with 18,000 TEU ships on the horizon. Ports have to deal with fewer arrivals, but now must offload twice the amount of containers in a short period of time.
Drayage Problems: All of the above have made it almost impossible for drayage drivers to get in and out of the port terminals in a reasonable amount of time, with many only able to make one turn a day versus two or three previously. As the drivers get paid per trip, this has made them an unhappy group. Additionally labor issues (contractor vs. employee issues) have resulted in driver shortages at some dray companies.
The Economy: On top of everything else, freight volume has been up this year due to an increasingly healthy economy.
The only possible winners in this situation may be the East Coast ports, as more shippers begin to route Asian imports to alternative ports. The opening of the enlarged Panama Canal in early 2016 will also allow larger ships to transit to the East Coast, provided those ports are able to handle the larger ships, which remains to be seen. The Canadian west coast ports of Vancouver and Prince Rupert have also seen increases, though both have a limit as too how much extra traffic they can take on.