Container Analytics
with Ben Meyer
One of the biggest stories in the container shipping industry at the moment is the massive congestion problems at the ports of Los Angeles and Long Beach. As with most complex issues, there is no single cause for the delays and congestion that has been building now for months.
One factor contributing to the problem is the increasing size of the containerships serving the West Coast, which carry more cargo than ever before and, as such, take longer to unload and reload. Another major cause of the congestion is the fact that most major liner carriers have divested themselves of their chassis fleets and, subsequently, did not arrange to have enough chassis available during the peak season leading up to the winter holidays. As a result, truck drivers often cannot get the chassis they need to move containers. Citing poor working conditions and worsening pay due to the fact that they simply cannot move as many boxes in a day as they once could, some drivers have quit, leading to a shortage of drivers as well.
The current contract negotiations between the Pacific Maritime Association (PMA), an organization that represents West Coast marine terminal interests, and the International Longshore and Warehouse Union (ILWU), which have been ongoing since July when their current contract expired, have not helped matters either. The PMA has recently accused the ILWU of exacerbating congestion issues by staging orchestrated work slowdowns and even stoppages, while the union has remained steadfast in its assertion that these claims are unfounded, or at the very least, exaggerated. As is usually the case, the truth of the matter is likely somewhere in between, but needless to say, the situation has been frustrating for importers and exporters alike, and has even begun to have adverse effects on the supply chains of shippers using the port.
Just how bad has the congestion become?
Figures published by the Marine Exchange of Southern California in late November showed 18 total vessels at anchor, or in other words delayed and awaiting berths due to congestion at the ports of Los Angeles and Long Beach. Twelve of these vessels were containerships, double the number that were at anchor at the end of October. Unfortunately for shippers in search of relief, none is expected any time soon as the PMA and ILWU remain deadlocked in their negotiations and there have even been reports that the slowdowns have spread up the coast to the ports of Oakland, Seattle and Tacoma. Even if congestion remains contained in Southern California, it is highly unlikely container lines could divert traffic to one of these other West Coast ports as they are simply not equipped to handle that much volume.
This begs the question: how big is Los Angeles/Long Beach really in the grand scheme of things? Sure, we’ve probably all heard that Los Angeles/Long Beach is the biggest, busiest port complex in the United States, but what does that really mean? How does it compare with other U.S. container ports in terms of volume?
Source: BlueWater Reporting. The chart, built with data from BlueWater Reporting’s Port Analysis application, compares approximate weekly deployed capacity for direct region-to-region services calling at Los Angeles/Long Beach to other major ports on the West Coast, as well as New York/New Jersey, the busiest port on the East Coast. Not surprising, Los Angeles/Long Beach leads the way with an estimated 239,264 weekly deployed TEUs; Oakland is next and New York/New Jersey follows closely behind with about 183,127 and 180,761 TEUs, respectively. A major difference between Los Angeles/Long Beach and the other ports shown is that of the 44 direct services which call there, 35 (nearly 80 percent) use the port as the first stop in the United States from another country, meaning that a higher percentage of the import cargo is being discharged there. By comparison, 32 of the 49 loops (around 65 percent) that make direct calls at New York/New Jersey use it as the first port in and only two of the 32 services (just over 6 percent) that stop in Oakland use the port as a first call in the United States.
Unfortunately, those looking for answers to the problem will not find an easy solution. Los Angeles/Long Beach is simply too big for carriers to divert cargo elsewhere, and although the PMA and ILWU cannot be held completely responsible for the congestion issues, it is unlikely there will be any significant improvement until after they reach a contract agreement.
Meyer is a research analyst with BlueWater Reporting. He can be reached by email.
This column was published in the January 2015 issue of American Shipper.