The 10-year anniversary of the crippling lockout of International Longshore and Warehouse Union workers at U.S. West Coast ports in 2002 is looming, and International Longshoremen’s Association members look to be commemorating the anniversary with their own threatened work action this year at U.S. East Coast ports.
Ignoring for the moment the potential for disruption to supply chains on the eastern seaboard, it’s pretty amazing to think about the changes on the transpacific in the last decade.
The 2002 lockout and the port gridlock in 2004 bookended a three-year period for Asia-U.S. imports that can only now be considered the halcyon days. Grounded forecasters realized that double-digit growth could only go on for so long. But even the most sober prognosticators assumed demand growth would just gradually lessen, not vanish completely and slowly rebuild as it has.
Instead of U.S. West Coast ports sharing a bounty, they’re back to fighting for the volume from every new service, as can be seen in the tussles between Tacoma and Seattle, and Los Angeles and Long Beach. Both are noteworthy.
In Seattle, which in March lost a Grand Alliance service to its neighbor, port executive director Tay Yoshitani told Containerisation International that price wars were hurting both ports.
“The price war between the ports is very damaging — we find ourselves competing against each other so our rate structures gets hurt as a result. We need to stop the competition. We need more co-operation,” he said.
In Southern California, where the 2002 lockout was acutely felt due to its massive volume, Long Beach has been losing ground on its neighbor the past six years. In February 2006, Long Beach actually had higher volume than Los Angeles, but since then Los Angeles has been wresting control over total Southern California volume.
Things peaked this January when Los Angeles had nearly 700,000 TEUs and Long Beach had 456,000 — in other words 60 percent of the volume between the ports. Some of the falloff in Long Beach can be attributed to the long-term projects underway there. But the reality facing these ports is that cargo growth is not what was pictured a decade ago.
Instead of ships being marooned offshore from U.S. West Coast ports due to longshore contract disputes or squeezed rail capacity, now it’s more likely ships will be parked in Asia due to lack of demand.
The irony is that rail capacity is increasing, terminal efficiency and yard space is on the rise, greener ships are arriving, and the ILWU-Pacific Maritime Association relationship has been relatively calm. Now all that’s missing is the demand. — Eric Johnson
Backyard brawling
