By Michael White
The cost of the ongoing labor dispute that has all but paralyzed cargo-handling activity at ports from Seattle to San Diego is starting to show with a domino-like impact that’s costing virtually every sector of the U.S. economy, from retail and manufacturing to high-tech and agriculture, a combined hit amounting to, according to some sources, almost $2 billion a day.
California, where a huge volume of U.S. agriculture is produced, has taken an especially hard hit, with port disruptions posing a major barrier to perishable goods headed to Asian markets. Export losses alone estimated to be running at hundreds of millions of dollars a week. Imports have also been heavily affected, with refrigerated and chilled cargoes of Vietnamese seafood, Wisconsin cheese, New Zealand lamb and Nebraska beef stalled in the clogged supply chain.
One of the smaller ports uniquely impacted by the labor disruption is Port of Hueneme, the only deep-water port located between Southern California and San Francisco Bay. Handling cargo valued at more than $8 billion, annually, the port’s proximity to the rich Central Valley region makes it a key export center for a variety of agricultural exports, with Sunkist Growers and tropical fruit and banana importers Del Monte and Chiquita basing their respective U.S. West Coast distribution operations there.
“All ports operate differently and terminal congestion, per se, has never been an issue here,” says Kristin Decas, the Port of Hueneme’s director and CEO. “Our business is different from that at either Los Angeles or Long Beach.”
It all comes down to the cost of doing business, the proverbial “bottom line,” she comments to Global Trade. “Nobody wins when you don’t understand what the over-all situation is. In our case, the critical issue is operational.”
Defining the impact of the ongoing labor dispute between the Pacific Maritime Association and the International Longshore and Warehouse Union on operations at the port, Decas says, being closed over the three-day President’s Day holiday weekend caused “a major scheduling conflict” for ships calling at the port.
Terminal operations at the 29 affected ports, which handle nearly half of all U.S. maritime trade and more than 70 percent of imports from Asia, were halted through the holiday weekend, before resuming on Tuesday. The three-day disruption was the longest to date in the eight month-long labor dispute, while cargo-handling operations were likewise ceased through last weekend and again last Thursday, a union holiday.
At the ports of Los Angeles and Long Beach, night vessel operations were suspended again late Tuesday, as they have been nightly since the companies started canceling late shifts on January 12 to focus on daytime work. The same has been true since December at the container ports of Oakland, Seattle and Tacoma.
Time is money, particularly in the ocean transportation business, and those delays, “equal increased costs for the carriers that, down the line, will be passed on to the people who own the cargo,” says Decas, who currently serves as chairwoman of the American Association of Port Authorities.
Supply-chain operations, she says, “are an expense, not a profit center and when something creates a kink in the chain it equals higher costs and lost market share.”
It’s “encouraging” that President Obama decided to dispatch Secretary of Labor Tom Perez to the West Coast in an effort to un-jam the labor contract negotiations, says Decas. “I hope he’ll be a positive influence … after all, at this point, it can’t hurt.”