ILWU Negotiations Assist NY/NJ Surpass LA/LB as Busiest U.S. Port
It’s develop into one thing of a behavior when speaking concerning the sister ports of Los Angeles and Lengthy Seashore to say they’re the busiest port advanced within the U.S. by way of cargo quantity introduced in by means of them. I don’t go searching up the stat after I routinely write roughly 40% of U.S. imports come by means of the Ports of Los Angeles and Lengthy Seashore. Nevertheless, one thing has modified that ought to make us writers who cowl the worldwide transport sector assume twice earlier than calling the San Pedro Bay port advanced the busiest within the nation.
A New King of the Ports
The Port of New York and New Jersey has just lately taken the crown because the busiest port by imported container quantity.
Michael Angell reviews within the Journal of Commerce:
The Port of New York and New Jersey turned the busiest US port by container import volumes in late 2022 because of new providers and cargo diversions stemming from congestion and longshore labor negotiations on the West Coast.
ILWU Palms Market Share to East and Gulf Coast Ports
Shippers have been diverting cargo from West Coast ports for the higher a part of a yr as a result of they know labor slowdowns have develop into a typical a part of Worldwide Longshore & Warehouse Union (ILWU) contract negotiations. 2002 and 2014-15 have been extraordinarily pricey examples of this each for shippers and the U.S. economic system usually.
The final ILWU grasp contract expired July 1st of final yr. Right here we’re six-and-a-half months later, and the ILWU seems no nearer to reaching a brand new contract than the day the earlier one expired.
In fact, there have been labor disruptions at West Coast ports throughout this negotiation interval, however shippers’ diversion of cargo from West Coast ports to East and Gulf Coast ports, one thing they started doing within the months main as much as the expiration of the ILWU grasp contract, helped mitigate the labor disruptions.
Shippers transferring discretionary cargo away from the West Coast gave East and Gulf Coast ports vital market share will increase. Invoice Mongelluzzo reviews numbers in one other JOC article:
The West Coast’s share of imports coming from Asia dropped to 58.8 p.c in 2022, down from 61 p.c in 2021, in line with PIERS, a Journal of Commerce sister product inside S&P International. The East Coast share rose to 34.2 p.c, up from 32.9 p.c, whereas the Gulf Coast share rose to six.7 p.c from 5.8 p.c.
The shift in market share continued as US imports from Asia fell general, with cargo transferring by means of the West Coast plummeting greater than 20 p.c in November from the year-earlier interval. The East and Gulf coasts noticed lesser declines.
Cargo Not Shifting Again Quickly
There’s no cause to assume this market share will return to West Coast ports anytime quickly. That’s as a result of there’s no cause to assume the ILWU contract negotiations will come to decision anytime quickly.
By all accounts, the ILWU is slow-playing negotiations till a ruling is made on a union jurisdiction dispute on the Port of Seattle’s Terminal 5. In response to Mongelluzzo, that ruling is predicted to be a month or two away.
Fortunately, congestion on the ports has been largely cleared away. Sadly, that’s due to financial downturn with demand returning to pre-pandemic ranges. At the very least for shippers, that’s excellent news by way of falling freight charges and cargo flowing by means of the ports way more easily. It additionally means already existent congestion isn’t there to amplify labor motion that disrupts operations on the ports.
My expectation is that issues between the ILWU and their Pacific Maritime Affiliation (PMA) employers will stay quite quiet till the jurisdiction ruling is available in. After that’s when rivalry is more likely to ramp up because the events should work by means of troublesome points, with automation more likely to make issues ugly. My fear is that if the ILWU loses its jurisdiction battle with the Worldwide Affiliation of Machinists and Aerospace Staff (IAMAW), tensions might escalate rapidly.
There’s no cause to assume shippers will convey discretionary cargo again to the West Coast till after a brand new contract is reached between the ILWU and PMA. That contract seems to be months away. I wouldn’t be shocked within the least to see us heading into this yr’s peak season with no contract in place.
Market Share Might Stay Away from West Coast Even After ILWU Decision
It’s anticipated as soon as a contract is lastly reached, cargo will return to the West Coast and the Ports of Los Angeles and Lengthy Seashore will retake their place because the busiest port advanced within the nation by way of imported cargo quantity. Nevertheless, among the market share East and Gulf Coast ports have gained will possible not return. Not solely are shippers bored with the cycle of contentious contract negotiations on the West Coast costing them cash, however East and Gulf Coast ports are investing in providers and functionality to maintain extra cargo quantity with them.
Angell shared quite a few issues the Port of NY/NJ is doing to help extra cargo transferring by means of it:
Maher Terminals has added three new super-post-Panamax cranes to an present berth which can be anticipated to be in service a while in 2023, whereas GCT Bayonne will add a brand new berth and cranes for super-post-Panamax ships by 2025 and Port Newark Container Terminal is finding out adjoining land so as to add capability. The primary bids for a $100 million venture to enhance a three-mile truck hall by means of the port are additionally anticipated to be submitted by subsequent yr, and PANYNJ is transferring ahead with a research on further rail monitor extending from the port that can scale back delays for intermodal service, however there isn’t a timeline at current for when these tasks will likely be accomplished.
In the meantime, causes for companies to proceed to maneuver away from China with their sourcing might help the Port of NY/NJ and others on the East and Gulf Coasts of their bids to carry extra market share that has historically belonged on the West Coast and on the Ports of Los Angeles and Lengthy Seashore specifically.
Actually, the Port of NY/NJ doesn’t simply need to be king for a day.
