On this Friday, February 20th, Supply Chain Matters provides another reader update and advisory on the all-important and unfortunately, all-consuming disruption occurring at U.S. West coast ports that is impacting multiple industry supply chains.
Various published reports indicate U.S. Secretary of Labor Thomas Perez has set today as a deadline for the Pacific Maritime Association and the west coast dockworkers union to end a long-running labor dispute that has clogged West Coast ports. The sides reportedly negotiated late into the Thursday night in San Francisco, but no agreement was reached.
According to a published report by the Los Angeles Times, City of Oakland Mayor Libby Schaaf, who has participated in a nightly call with Perez and mayors of other West Coast port cities, told the Associated Press that if a deal isn’t reached today, Perez plans to force the parties to Washington, D.C., next week to finish negotiations.
All reports seem to indicate that the one remaining issue of contract talks center on the union’s desire to have a unilateral say on the removal of an arbitrator called in to alleviate work disputes. According to the LA Times, the union is focusing on one specific arbitrator who handles contract grievances at the ports in Los Angeles and Long Beach.
From our lens, most of this week’s reports indicate that the pressure for both parties to resolve this ongoing dispute has become far more intense. We have viewed reports indicating that as of yesterday, 32 container ships were at anchor near the ports of Los Angeles and Long Beach, awaiting an available berth. The repercussions continue to involve other West Coast ports and shipping lines with reports of on-time performance at dismal rates.
It has further become more expensive for industry supply chains to mitigate the current disruption with a new report from Drewry indicating that rates for container ships destined for U.S. East Coast ports are also skyrocketing.
The Journal of Commerce (paid subscription required) reported yesterday that even Wal-Mart is being affected, indicating that shipment delays are hurting its business and threaten its Spring and Easter holiday inventory needs.
The bitter reality for multiple industry supply chains however, remains that even if contract talks are resolved, it will take months before any U.S. west coast port operations return to a state of normalcy, if at all. As we have opined in our previous postings, the underlying issues of the structural impacts of unloading and loading far larger container ships, the notion of proper scheduling of now outsourced trailer carriages and the consequences of trucking lines classifying truck drivers as casual, independent contractors remain challenges to be addressed.
By our lens, the shipping industry is in a state of denial and blindness to customer needs for on-time reliability and effectiveness. Instead, the industry remains focused on individual interests. That unfortunately foretells that 2015 will indeed be a year of continued turbulence for global transportation.
© 2015, The Ferrari Consulting and Research Group LLC and the Supply Chain Matters blog. All rights reserved.
Late last night, U.S. Pacific time, a tentative agreement was reportedly reached in the labor contract talks involving U.S. west coast ports. This avoided a more disruptive scenario of all ports being shutdown.
Readers can view our Breaking News commentary published this morning for more details.