SpaceX’s lease on a 19-acre site at the port will end in February, while Cal Cartage will close its warehouse on an 85-acre site in July.
Despite the Port of Los Angeles thriving in 2018 in terms of cargo volumes, handing a record amount of containers, the port will see two tenants -SpaceX and California Cartage – trim operations in the coming months.
The Port of Los Angeles handled 9.46 million TEUs in 2018, up 1.2 percent from the prior year. “2018 was marked by a robust economy, coupled with tariff-induced surges of cargo headed to U.S. retail and manufacturing sectors,” said Gene Seroka, the port’s executive director.
Silicon Valley-based freight forwarder Flexport on Wednesday cited “extreme congestion” at the ports of Los Angeles, Long Beach and New York “as a result of the influx of import volume in advance of the tariff hikes, peak season, and Chinese New Year preparations.”
“The large import volume is causing a chassis shortage and long pickup times, so you may experience some shipment delays in the next few weeks,” Flexport said.
Elon Musk’s SpaceX, which last April had leased a 19-acre site at the port where it planned to build rockets, gave a 45-day notice on Jan. 7 to terminate that lease, effective Feb. 21.
The company now plans to build rockets in Hawthorne, Calif. and in Texas.
However, SpaceX, which recovers used rockets at the port’s east channel, said it will continue to use the port for that purpose. There are discussions about whether the 19-acre site, the former Southwest Marine shipyard, might be used for that purpose.
Meanwhile, NFI’s Cal Cartage subsidiary will close its warehouse on an 85-acre site at the Port of Los Angeles in July. The warehouse, located in the Wilmington section of the city, has been in operation for five decades.
The company and the Teamsters union traded accusations over who was responsible for the closure.
An NFI spokeswoman said employment of about 800 persons is supported by the warehouse, consisting of temporary laborers, independent contractors and vendors. The jobs range from warehouse workers, to maintenance personnel, to office staff and independent contract drivers.
She added that Cal Cartage will work with existing customers – which include Lowe’s, Amazon, TJ Maxx and Sears/Kmart – to move them to other company-operated facilities in the region.
NFI said it “has been left with no option but to close the warehouse in July 2019 as a result of the failure to renew the company’s lease agreement. That failure is a direct result of the strategy undertaken by the Teamsters to spread misinformation and untrue statements about Cal Cartage as part of its continued effort to organize Cal Cartage’s Wilmington employees, despite the employees overwhelmingly voting against unionization.”
Fred Potter, the director of the Teamsters Port Division, said, “NFI should act responsibly and stop pointing fingers at the Teamsters when it’s NFI that has continuously and persistently broken the law. If the company is unwilling to follow the law and play by the rules, and in doing so puts the port’s proprietary interests at risk, then they are wise to vacate the property to make room for a company that will follow the law.”
Sid Brown, chief executive officer of NFI, said, “We have been fighting, with the help of our employees, for the past four months to negotiate a deal to keep this facility open long-term. This is not the outcome we wanted. Because of the Teamsters’ efforts, we now have been left with no other option but to shut down the Wilmington operation.”
Last year, the Board of Harbor Commissioners for the Port of Los Angeles approved a revocable permit that allowed the NFI/Cal Cartage unit California Transload Services to continue to operate at the property at 2401 East Pacific Coast Highway, paying rent of $5.4 million per year, but the Los Angeles City Council vetoed the approval in October.
“In a settlement that will be considered by the Harbor Commission at its meeting on Jan. 24, Cal Cartage will have six months from the time the settlement agreement is signed by the Harbor Commission to wind down its operations at the Wilmington warehouse facility,” NFI said. “Under the negotiated settlement terms, the company will pay severance to employees who will lose their jobs in order to help support them and their families as they look for new jobs.”
The Port of Los Angeles said, “While these developments are disappointing, port staff will immediately release a request for proposals seeking a new operator on the premises in order to keep cargo moving efficiently at North America’s busiest container port.”
NFI said, “The Teamsters prevented a negotiated lease, despite Cal Cartage’s willingness to agree to allow the employees to once again vote on whether to unionize.”
The Teamsters and its Justice for Port Truck Drivers affiliate claim that port drayage drivers working for NFI and Cal Cartage are misclassified as independent contractors and said that during a 2016 election on whether warehouse workers should join the Teamsters, the company “broke numerous laws largely casting serious doubt on the legitimacy of that election.”
“We have always welcomed the opportunity to have a second election at the warehouse,” said Eric Tate, secretary-treasurer, Teamsters Local 848. “However, it is clear by their behavior that the company does not want to have a fair, honest, and lawful election.”
Port of Los Angeles tenants trim operations
