Ports and Progression (Part 2)

Continued from January 28, 2015

View Part 1 here.

The domino effect of the Los Angeles and Long Beach Port continues to be analyzed. As one party's need became a right, another party steped forward with callous disagreements. As this nine month process of blame casting and stalling progressed, vessels have been anchored offshore for days, product has been delayed to the point that many commodities could not be delivered at all. Even after a ship is docked, unloading has been delayed. After it has been unloaded, loading trucks out of the ports has been delayed. Carriers dispatched to ports for pick up have had to deal with delays that in some cases have increased from hours to days of delay. Costs for shipping, drayage, and transloading have increased. Rail lines, BNSF in particular, have announced moratoriums on port service because of the cost to the rail line for the delays in unloading export freight and reloading imported goods. Imported goods were diverted to other West Coast ports at first until the ILWU actions affected them as well. 

Many loads have now been diverted to Houston, Miami, Jacksonville, and ports in New England. This is creating artificial peaks in the demand for available carriers in those areas. Since these peaks are not in traditional periods of higher demand, fewer trucks are available. This creates a real shortage and since demand for trucks outstrips the available pool, prices to cover those lanes have risen and will continue to rise as long as there is a shortage of available carriers. And Houston, specifically is receiving product that was originally intended for California, which now has to be trucked cross-country back to California for delivery. So, the port slowdowns have created longer transport lanes, higher costs, and more delays even after the product has been offloaded and is available to transport. Inevitably, the additional shipping costs and the additional costs incurred by the longer line hauls created will be passed on to the consumer.

So how far does the impact of this impasse reach? It has now reached into every home in America. So how soon can we expect resolution? Things are not looking good. As of Thursday, January 15, 2015 even more ships are being anchored offshore at major ports on the West Coast. Even more product is being delayed or lost because of its time-sensitive nature.

The losses are staggering. For every day of delay the estimated loss to the shipping lines is $40,000.00 per vessel. On the 15th, at least 27 vessels were anchored offshore. They represent over one million in losses every day they have to wait. And this does not include the vessels already in the ports and the delays encountered there. With the length of time that this squabble between the ILWU and PMA has dragged on, losses have mounted to the billion dollar level for shipping lines alone. The losses to companies providing drayage, transloading, intrastate and interstate transport, and the consumer are harder to assess. Many manufacturers have had to switch to airfreight in order to receive parts to complete their committed orders. And these are parts that had already been ordered and placed in a container on a ship but never made it into port. Imagine paying for a product twice but only receiving it once. How long will it be before we all feel like that trying to buy imported goods at the grocery store? How long will it be before those products are simply not available? These questions remind us that it is difficult to please everyone, but perhaps it's even more difficult to do what is just.