USWC Port Congestion & ILWU/PMA Contract Update. Last update: November 12, 2014
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1 USWC Port Congestion & ILWU/PMA Contract Update Last update: November 12, 2014
2 ILWU / PMA CONTRACT UPDATE July 1 st : ILWU / PMA the 6 year contract expired without new contract in place Both parties agree to continue working through the extended contract negotiations Many importers and exporters divert cargo through Canada and USEC ports August 26 th : parties reach a tentative agreement on medical benefits Remaining key topics include technology advancements and ILWU work jurisdiction Port congestion continues to build and ILWU productivity is labored PMA calls for additional casual labor workers from ILWU Terminals begin costly night gate operations November 1 st : PMA releases statements of ILWU work slow-down at USWC ports Filling only about 50 percent of the positions for skilled equipment operators Productivity reduced by 40 60% ILWU states productivity down due to congestion and safety concerns November 4 th : shippers request President Obama to send a federal mediator to help finalize new contract negotiations November 5 th : ILWU labor in Tacoma sent home due to lack of productivity November 10 th : ILWU labor in Oakland walks off the job for 3 consecutive shifts
3 USWC PORT CONGESTION THE PERFECT STORM There are at least a dozen reasons for the port congestion which have all accumulated to the current severe conditions and have been called the Perfect Storm by Port of Los Angeles Executive Director Gene Seroka. Some of the key issues we can attribute to the congestion are: Shortage of available chassis Chassis are operated by 3 different leasing companies scattered across the harbor with ebbing flows of excess in some terminals and deficits in other terminals Containers and chassis are being held by shippers and importers awaiting appointments to be returned to terminals Many chassis are in need of repairs. ILWU labor to repair them is very expensive and the labor jurisdiction is still under contract negotiations. High import volume for holiday season Ocean Freight Index shows containerized ocean imports into the U.S. surged 19.3% yearover-year in September* Shift in container imports from USWC to Canada ports have had some carriers temporarily suspend US imports through Canadian ports TPEB all-water vessels to USEC are overbooked *Source: Cass/INTTRA
4 USWC PORT CONGESTION THE PERFECT STORM (continued) Larger ships require extra time 2009 the average container ship could carry 8,000 TEUs (twenty-foot equivalent units) 2014 the average container ship can carry 12,000 or 14,000 TEUs Each vessel call generates 5,000 to 10,000 container moves during the several days the ship is at port Driver shortage Southern California truck and driver population went from 15,000 to less than 10,000 as non-compliant trucks were phased out due to Clean-Truck program Teamster union efforts to organize owner operators on USWC ILWU labor productivity Congested marine terminals generate hundreds of extra container moves in the yards PMA indicates the labor man-hours is up 20% compared to same time last year; although the container throughput (combined import and export container moves) is up only 5% 9 of the world s largest ports average 180,000 TEUs per quay crane, per year. Shanghai and Hong Kong average in excess of 230,000 TEUs per year. Los Angeles and Long Beach combined average is approximately 100,000 TEUs per year. 43% of the USA s containerized imports arrive into the Ports of Long Beach/Los Angeles. *Source: Cass/INTTRA
5 LA / LB Container Dwell Time Acceptable trucker dwell time to pick up or deliver containers in the port is 1 hour. Containers for export are held outside of the ports in storage areas awaiting delivery appointments Average dwell time for Import IPI containers arriving for inland rail transport either ondock or off-dock are experiencing severe delays APMT: Delays to 34+ days PCT: Delays to 20+ days TTI: Delays to 10+ days LA-LB Terminal Turn Times for Nov 10 and 11, /10 11/10 11/10 11/11 11/11 11/11 Day Night Average Day Night Average YTI TERMINAL WEST BASIN TERMINAL TTI HANJIN TERMINAL TRAPAC TERMINAL STS - EVERGREEN MAIN PIER A TERMINAL PACIFIC CONTAINER TERMINAL MAERSK TERMINAL LONG BEACH CONTAINER TERMINAL ITS TERMINAL K-LINE CUT WEST APL EAGLE MARINE TERMINAL Average WBCT: Delays to 21+ days ITS: Delays to 14+ days Trapac: Delays to 15+ days Due to carrier alliance and vessel sharing, each terminal can be used by several different carriers Carriers discharging in their own terminal will prioritize their own containers first
6 Impact Exports: Due to high demand, carriers are pushing for price increases from USEC Customers are diverting cargo via USEC, Gulf, and Canadian ports (where acceptable) Some carriers have embargos and stop accepting containers at any given day from certain IPI points even after container loading. This is causing additional trucking/storage/chassis charges. Due to import delays, carriers are demanding earlier port cutoffs for exports. Some containers are bumped, causing storage charges/demurrage/detention fees. Vessel delays on ETD Increase in local and domestic trucking costs and shortage of over-the-road equipment Imports: IPI containers are being terminated at USWC ports, trans-loading and delivery by trailer to door. IPI via USWC containers are being sent RIPI via USEC Containers may be available at the LGB/LAX terminal but trucker is unable to pick up until after last free day, incurring up to thousands of dollars in demurrage fees Delayed deliveries/cancelled orders/increase in landed costs Increase in local and domestic trucking costs and shortage of over-the-road equipment Both Exports/Imports: Air freight space shortage in some markets due to switch to this mode for urgent cargo
7 Terminal On-Dock Rail
8 Bottleneck of Container Ships at Sea Under normal conditions, arriving container ships are given priority and moved directly to berth. As of November 12 th, tracked 12 container ships anchored at sea, awaiting berth space. Due to arrival delays, the export shipments are also delayed for container receiving, as well as ETD.
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