Shippers Diverting Cargo from West Coast Ports w/ Information Graphs

The labor dispute coming to an finish on the West Coast ports doesn’t imply the ports have regained shippers’ confidence.

It would take months to clear up the congestion that reached crucial ranges throughout the Worldwide Longshore and Warehouse Union (ILWU) contract negotiations with the Pacific Maritime Affiliation (PMA), however many shippers have determined to divert their cargo away from the West Coast ports for years.

Mark Szakonyi wrote an awesome article for the Journal of Commerce (JOC), which shared the outcomes of their survey of 138 shippers relating to whether or not or not they deliberate to divert cargo from West Coast ports in 2015 and 2016.

The outcomes of the survey should not good for West Coast ports.

Simply over 65% of the shippers who responded to JOC’s survey reported that they plan to divert cargo from West Coast ports in 2015 and 2016.

These shippers don’t plan to return their cargo to West Coast ports after these two years end, both. In accordance with the JOC article, “The proportion of shippers planning to completely reroute some cargo away from the coast is sort of equivalent to the 66 p.c of shippers who stated the identical factor after they have been surveyed by JOC.com in mid-December.”

To the place do the shippers plan to divert their cargo?

Whereas JOC’s article signifies just a little over 5% of shippers diverting their cargo are not sure to the place, the largest winners of diverted West Coast port cargo are U.S. East Coast ports. Southeast U.S. ports ought to obtain 22.7% of the diverted cargo whereas U.S. Northeast and Gulf Coast ports are at a lifeless warmth with an anticipated 16.1% of the cargo.

Not all diverted cargo will undergo U.S. ports in any respect. 14.7% of shippers planning to reroute their cargo reported plans to divert cargo to the Ports of Metro Vancouver and Prince Rupert. Lower than 1% stated they are going to use Mexican ports.

Right here’s a bar graph of the place West Coast cargo will likely be diverted to in 2015 and 2016 from JOC’s survey knowledge:

Who’s in charge for the West Coast ports dropping cargo?

Through the ILWU contract negotiations, port congestion badly damage U.S. importers and exporters. Delays, charges, misplaced gross sales, misplaced enterprise companions… the harm carried out to the U.S. financial system is within the billions of {dollars}.

The JOC survey requested shippers whom they blamed for the disruptions on the West Coast ports throughout the contract negotiations. Was it the union’s fault or the employers’ fault or each?

Largely, shippers blamed the union.

61.7% of the shippers surveyed put the blame solely on the ILWU whereas solely 2.2% of the shippers put the blame solely on the PMA in accordance with the JOC article. 34.5% blame each events, the union and the employers.

West Coast ports didn’t even have to attend for 2015 and 2016 to see cargo diverted to different ports.

Mark Szakonyi reported within the JOC article:

There have been already diversions by importers underneath approach final yr, particularly within the fourth quarter when the West Coast congestion was at its worst. Fourth-quarter import progress was 12.6 p.c on the East Coast, 11.8 p.c on the Gulf Coast and 5.3 p.c on the West Coast, in comparison with the fourth quarter of 2013. The information is from PIERS, a sister product of JOC.com inside IHS.

That dropped the West Coast’s share of imports barely from 54.57 to 54.04 p.c, and elevated the East Coast’s share of imports from 39.32 p.c to 39.85 p.c, and the Gulf Coast’s share from 6.11 to six.12 p.c, in accordance with PIERS.

West Coast ports are making strikes to clear the congestion and regain the boldness of shippers. These embody a chassis initiative and a free-flow container operation that we’ll discuss in an upcoming weblog.

For a lot of shippers, these actions to clear congestion are too little, too late.

On prime of that, they really feel the problem of labor disputes, particularly every time a brand new contract is being negotiated, is a core explanation for unreliability at West Coast ports that no strikes are being made to resolve.