Three Strikes

It’s often said that things come in threes: The Three Stooges, The Three Little Pigs, the Big 3 and, of course, the P3.

In the U.S. container port industry, there’s another Big 3: Los Angeles and Long Beach on the West Coast and New York-New Jersey in the East. Together, the three ports accounted for nearly half of the 30 million TEUs of containerized imports and exports that moved through the country last year, according to PIERS.

When things are good, no one can match the ports and their surrounding population centers that virtually guarantee their standing at the top of the U.S. port rankings. The Southern California ports’ deep waters allow some of the world’s largest container ships to call. Long Beach and New York-New Jersey rank highly in JOC Port Productivity research.

But when things go bad, as they did last summer when glitches in a new operating system at Maher Terminals in Elizabeth, N.J., caused massive delays and disruption to supply chains, they go really bad.

Now, barely a year after Superstorm Sandy shut New York-New Jersey for a week, a new storm is brewing that again threatens to throw the port into turmoil.

As Joe Bonney documents, the International Longshoreman’s Association is aligning with business interests represented by the New York Shipping Association against the Waterfront Commission of New York Harbor, the crime watchdog agency holding up the hiring of hundreds of ILA dockworkers as it attempts to change the culture and promote diversity on the docks.

In the process, it has raised the ire of ILA President Harold Daggett, who charged commission members with “overstepping their boundaries” while warning of “trouble ahead.” When Harold Daggett issues a warning, shippers and other supply chain interests listen, given the angst his union and management caused during last year’s contract negotiations.

The Southern California ports have their own problems, and it starts with leadership — or lack of it. In Los Angeles, Executive Director Geraldine Knatz’s retirement, brought about by new Mayor Eric Garcetti’s desire to install his own port leader, will leave the nation’s largest port with an interim director, Gary Moore, who doubles as city engineer.

And Long Beach, of course, is caught up in political infighting over the direction it takes in the wake of last summer’s departure of Executive Director Chris Lytle, who bolted for the Port of Oakland.

For all three ports, political wrangling could speed the flight of cargo to other ports as shippers seek to avoid the risks — real or perceived — that could jeopardize their supply chains. As Bill Mongelluzzo reported in the Oct. 28 JOC, Los Angeles-Long Beach’s share of Asia imports already has declined from 56.5 percent in 2003 — a year after a crippling a 10-day employer lockout of dockworkers during contract talks — to 48.8 percent last year.

And New York-New Jersey’s share of East Coast cargo volumes has slipped from 38 percent to 36 percent in the two years through this year’s second quarter, JOC research shows.

Shippers, as those numbers indicate, are quicker to shift their routings for discretionary cargo away from potential problem areas. The Big 3 ports had best heed those trends or risk further erosion.

We’re mere months away from the start of another round of West Coast labor talks. If last year’s ILA talks are any indication, the wild ride at LA-Long Beach is about to get wilder. If that translates to cargo shifting east during next year’s peak season, the big question is this: Will New York-New Jersey be ready?

Contact Chris Brooks at cbrooks@joc.com and follow him at twitter.com/cbrooks_joc.

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