A Journal of Commerce survey found that cargo owners are flustered by the eight-day office clerical workers strike last month in Los Angeles-Long Beach, and the possibility of an East and Gulf Coast dockworker strike three weeks from now, but cargo diversion is not an option for many shippers.
Of the 128 importers and exporters surveyed, 39 percent said they will ship less cargo through the Southern California gateway in the future because of the strike by the Office Clerical Unit of International Longshore and Warehouse Union Local 63 from Nov. 27 to Dec. 4.
A total of 61 percent of the respondents said the OCU strike would not affect how much cargo they ship through Southern California in the future, and 63 percent of the shippers said they would not route their cargo through Canada or Mexico, or increase their use of ports there if they are already using those gateways.
Cargo interests are clearly anticipating a strike by the International Longshoremen’s Association at East and Gulf Coast ports after the contract extension expires on Dec. 29, with 78 percent saying a strike is likely.
While 48 percent of the respondents said they plan to divert cargo from the East Coast to ports on the West Coast or in Canada if there is an ILA strike, a number of shippers said diversion, logistically, was not an option, or, in the case of exporters, that overland transportation costs to the West Coast are too high.
When diversion is considered, Prince Rupert and Port Metro Vancouver seem to be popular gateways. Those ports have good rail service to the U.S. Midwest. Some shippers are looking at ports such as Ensenada, Manzanillo and Lazaro Cardenas on Mexico’s Pacific Coast, but most shippers have no direct experience with those gateways.
Even those respondents that expressed a visceral dislike for longshore unions said that at the end of the day, supply chain logistics determine the routing of their cargo. Importers of Asian cargo with distribution centers on the West Coast cannot divert shipments to the East Coast. Importers with most of their customers on the East Coast could ship via intermodal rail through the West Coast, but the cost would be higher.
However, in the longer term, a number of respondents said they are concerned about dockworker labor actions on both coasts and are thinking more of spreading out their gateways, where possible, to hedge against strikes or employer lockouts on either side of the country.
Several respondents said they believe the OCU strike in Los Angeles-Long Beach will embolden the ILA to strike later this month or after the Jan. 1 holiday. All of the respondents who expressed opinions about the dockworker unions did so in an unfavorable manner.
Some respondents expressed the view that the Obama administration did not act quickly enough to end the OCU strike, and they said that would encourage the ILA to strike. But in 2002, when the entire West Coast was shut down by the employer lockout, it took 10 days for President Bush to seek a Taft-Hartley back-to-work order. In contrast, federal mediators were already on the way to intervene in the OCU strike on its eighth day, although four of the 14 terminals in Los Angeles-Long Beach remained open, and the other West Coast ports were unaffected by the strike. The strike ended while the mediators were in transit from Washington, reportedly because the union felt the mediators would not support them.