June update on Supply chain woes
Updated: Apr 12
ILW Port strike Status
Long Beach Port Chief Doesn’t See Labor Deal by July 1 Deadline
The head of the US’s second-busiest port doesn’t see talks over new labor contracts for 22,000 dockworkers at 29 West Coast operations reaching settlement by a July 1 deadline, but is optimistic of a solution a month or two later.
“I have confidence that the two parties know what’s at stake here,” Port of Long Beach Executive Director Mario Cordero said on Bloomberg Television on Friday. “They will resolve their differences within a reasonable time. It’s not going to be before July 1. But I think we may be looking to a couple of months thereafter. On that front, I’m optimistic.”
Talks to work out the new labor contract started May 10. The International Longshore and Warehouse Union and the Pacific Maritime Association — which represents about 70 employers — both say they expect cargo to keep moving until an agreement is reached.
When the parties last got together to discuss contracts in 2014, West Coast ports faced months of slowdowns that only ended when the White House got involved.
Two years of record consumer spending have seen cargo loads hammer ports, particularly on the US West Coast, with delays and congestion. Workers are seen as having additional leverage as carriers have reaped record profits in a tight market. While wages and benefits are frequent sticking points, the employers’ right to automate could emerge as a particularly thorny issue.
Cordero’s caution comes after the Journal of Commerce reported Friday that the ILWU asked for negotiations to be put on hold until June, citing people it didn’t identify who are close to the matter. Last week, both parties said the talks would happen on a daily basis until an agreement was reached. The union didn’t respond to a request for comment, while the PMA declined to comment.
Earlier this week, Port of Los Angeles Executive Director Gene Seroka said there’s “no need to worry right now” about the negotiations, adding that “dockworkers are still going out in record numbers and will continue to do so.”
Should an agreement not be reached, “we have implemented measures to make sure that we keep some fluidity in the movement of cargo,” Cordero said in a separate interview on Bloomberg Radio, pointing to the pilot 24/7 initiative at Long Beach and Los Angeles.
“I don’t expect a slowdown by labor,” the Long Beach port chief said. “For us, we’re certainly better prepared to address any type of scenario than maybe we were a year ago.”
Peak Season
Cordero said the port is preparing for the peak season in shipping, which usually starts in July ahead of the holiday season. This year, it’s likely to coincide with the increase in cargo arrivals that had been held back from the US because of the lockdowns in China. “That’s going to have a domino effect,” he said.
“An uptick? Yes. To what extent? We don’t know,” he added.
–With assistance from Romaine Bostick, Caroline Hyde, Taylor Riggs, Tim Stenovec and Katie Greifeld.
Possible effect : Increase in ocean freight cost due to demand. Longer lead time for transit . Continue shortage on equipment. Key is plan ahead.
Ocean Market condition :
The market in Long Beach/Los Angeles remains congested despite inbound volumes from China decreasing due to COVID lockdowns. We are cautiously awaiting the impact as Shanghai begins reopening after two months of restrictions. There are currently 11 vessels at anchor, 55 near the port, and export dwell is on average 7-15 days. Schedule reliability continues to be low and impact terminal operations. Truckers and shipping facilities continue to see the impact of these schedule shifts, having to make several last-minute adjustments with manpower, securing equipment within receiving windows, and load and in-gate containers within small and late announced receiving windows. Lastly, the ILWU is also in the middle of contract negotiations with an expiration of their current contract of July 1 2022.
With regards to transit and capacity: US-Asia has slightly opened up. Bookings are 2-4 weeks out. North East Asia is slightly quicker and easier to secure than South East Asia which often requires transship. US-Australia remains extremely congested. Bookings are 3-6 weeks out. Long Beach terminal operations have moved from SSA to ITS. US-Europe is 2-4 weeks out. Options remain limited. Transit is up from 35-40 days to 50-60 days for some services. US-MAIR and Africa is also impacted by subsequent Europe/Asia tranships. Transit time is generally up and rail options are limited. Bookings are 2-4 weeks out. US-South America capacity is limited. Bookings are 2-4 weeks out.
Recent COVID-19 outbreak has resulted with tighter control, and the restrictions are causing labor shortage, equipment shortage, terminal congestions and also sailing schedule delay in especially following ports:
Los Angeles(US) - It is expected that ships will be waiting for berth in about 9 – 10 days
New York(US) - It is expected that ships will be waiting for berth in about 3 days
Please keep in mind this does not include slow down in transit time due to congestion at port.
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“These fuel costs are the biggest thing we’re facing right now,” said Jake Phipps, chief executive of Phipps & Co., a West Palm Beach, Fla.-based manufacturer of interior finishes and building materials for real-estate developers. He said the company’s shipping costs within the U.S. have risen 15% to 20% from last year, pushing it to make changes to its distribution operations as some customers reconsider projects because of rising costs.
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