Dive Brief:
- The head of the Port of Los Angeles said Thursday he remains confident West Coast port employers and dockworkers will get closer to a contract agreement over the next few months as stalled negotiations continue to pressure cargo flow.
- “It may not get done in February or March, but I'm still pretty confident that we'll see some real progress here in the springtime,” Port of Los Angeles Executive Director Gene Seroka said during a monthly press briefing.
- West Coast dockworkers have been operating without a contract since last summer, and uncertainty over negotiations has pushed shippers to shift cargo to East and Gulf Coast ports. The Port of Los Angeles processed 726,014 TEUs in January, a 16% YoY decrease.
Dive Insight:
Talks between port employers and workers represented by the International Longshore and Warehouse Union continue to drag on, with Seroka saying that “we’re at the outer edges of what historically has been the farthest reaching end of negotiations like this between these two sides.”
With negotiations in flux, shippers are continuing to move cargo away from the West Coast to avoid any potential for disruption. And although Seroka has crossed the country in an attempt to win back cargo share, the Los Angeles Port director said “there is still trepidation among shippers.”
“There are many transportation managers that yet couldn't go back to their boss for a third straight year and say, ‘I got our cargo stuck in the jaws of congestion out in California,’” he said.
Contract uncertainty has only exacerbated a volume slowdown at the Port of Los Angeles. As with other hubs across the nation, the port is contending with dampened demand and extended factory closures in Asia associated with the Lunar New Year holiday.
As capacity loosens at other ports, it’s possible even more shippers will take the opportunity to shift cargo away from the West Coast.
“Most shippers are seeing a surge in ocean shipping capacity and have already adjusted their shipping lanes to other ports,” Spencer Shute, principal consultant at supply chain consultancy Proxima, said in an emailed statement. “Continuing this practice until the negotiations have completed is the best practice to reduce risk.”
