Though the labor dispute between the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) may be over, nearly a year of ongoing negotiations has led to a major backlog of shipments left along the West Coast’s more than two dozen ports. A month removed from the contract agreement, cramped conditions are forcing many shipping companies to seek out a different outlet to perform their exporting and importing activities, according to the results of a recent survey.
Roughly 4 in 10 retailers and manufacturers intend to move their shipments from the West Coast to the East Coast, believing that doing so will increase the speed with which they can send and receive goods, according to a new poll conducted by American Shipper. Additionally, companies who indicated their desire to do this say it will be for the long-term.
Eric Johnson, research director and author of the American Shipper report, pointed out that the consequences of the labor dispute are being felt more acutely.
“Port congestion on the West Coast the past nine months has had an indelible effect on shippers,” said Johnson. “It’s clear many shippers and 3PLs [third-party logistics providers] are rethinking how to structure their supply chains so they’re less vulnerable than they have been over the past year.”
He added that based on the survey, it’s clear that many shippers, retailers and manufacturers believe that the best move is to relocate to ports and distribution centers on the opposite side of the country.
The report also went on to say that whether companies effectuate their intentions has yet to be determined. Approximately 400 companies took part in the survey.
Volume higher than normal for March
Shippers shifting their operations to the East Coast has the potential to reduce congestion considerably, helping to ease the backlog more quickly. According to the National Retail Federation (NRF) and Hackett Associates, container ports in March are expected to be 17 percent busier than the same month last year.
Jonathan Gold, vice president of supply chain and customs policy at NRF, predicted what many shippers have already realized.
“It’s going to take months to get back to normal on the West Coast,” said Gold in a press release. “Retailers’ immediate priority is to make sure spring merchandise reaches store shelves in time. Going forward, we want labor, management and Washington to work together to see that we never again have a situation like what we went through these past several months.”
According to Global Tracker, ports handled approximately 1.2 million twenty-foot equivalent units (TEUs) in January. Because of the labor dispute, this was down nearly 10 percent from year-ago levels. in February, ports sent and received 1.2 million TEUs, up 2.3 percent from the same month in 2014.
Ports are expected to see 1.5 million TEUs in March, much of which will hold merchandise that’s frequently purchased in spring, NRF reported.
East Coast not without its disadvantages
Though the more comfortable confines may be what some shippers are longing for, there are some advantages to staying put, according to Ben Hackett, founder of Hackett Associates, a consulting firm for the maritime industry.
Among the compelling factors include the West Coast being the main outlet through which U.S.-related goods are sent and received. Also, because importers have a lot invested in the West Coast, much of their spending would go to waste. Shipments take longer to arrive to their intended destinations as well, all adding up to higher expenses for shippers and retailers.