LOS ANGELES — In a move that could worsen the congestion at the West Coast ports and cost importers up to $3.8 billion in excess costs this year amid protracted negotiations over a crucial labor contract, the Pacific Maritime Association suspended operations to unload containers off ships over the weekend.
The association, which includes 72 multinational cargo carriers and terminal operators, said Friday afternoon that containers were not to be moved on or off vessels docked at 29 ports on Saturday and Sunday. It made the decision in response to what it views as slowdowns orchestrated by the International Longshore and Warehouse Union, which has been embroiled with the employers’ association over the past nine months in talks to finalize a new contract affecting 20,000 dockworkers.
“After three months of union slowdowns, it makes no sense to pay extra for less work,” said a PMA spokesman, “especially if there is no end in sight to the union’s actions, which needlessly brought West Coast ports to the brink of gridlock.”
Representatives at various ports said the terminals weren’t shut down completely on Saturday and Sunday, as operators still moved containers that had already been unloaded from ships and truck drivers continued to transport cargo in and out of the facilities. West Coast ports are responsible for about half of the imports coming into the U.S.
Considering the backlog of cargo that has been accumulating over the past few months, the PMA’s announcement didn’t help improve productivity. At the ports of Los Angeles and Long Beach, the two busiest in the nation, 18 ships have been waiting off the coast. In Tacoma, Wash., as of Friday afternoon, seven ships sat at anchor waiting to enter the port. Another seven vessels were docked at the terminals, but their cargo remained aboard with the PMA-issued suspension.
“If there’s no vessel operations over the weekend, that number [of waiting ships] could grow,” said a spokesman for the Port of Long Beach, Calif.
A a spokeswoman for the Port of Tacoma, Wash, added: “It will definitely contribute to a bigger backlog.”
Kurt Salmon, a management consulting firm based in New York, estimated the cost of holding inventory longer at the ports, coupled with lost sales from the unavailable merchandise, could cost retailers up to $3.8 billion this year. When combined with the costs of rerouting products from West Coast ports, missed sales opportunities due to out-of-stocks and other factors, the costs could increase to $7 billion in 2015. Moreover, the ports could face a glut of arriving vessels in the coming month as companies rush to dispatch shipments before Lunar New Year starts on Feb. 19 and the flow of goods from Chinese ports stalls.
“I wouldn’t count on the backlog to clear up in less than six months,” said Frank Layo, a partner at Kurt Salmon. “By then, the volume will pick up because everybody is ordering early [for the holiday season].”
Criticizing the decision by the cargo carriers and terminal operators to suspend weekend operations as “reckless and irresponsible,” the union countered that the ports suffered from congestion throughout 2014, long before any accusations of slowdowns. The association and union resumed negotiations on Friday.
“Fortunately, there are few differences remaining,” said an ILWU spokesman.
Among importers, patience is wearing thin for the negotiations between the PMA and ILWU.
“Enough is enough,” said Jonathan Gold, vice president for supply chain at the National Retail Federation. “The escalating rhetoric, the threats, the dueling press releases and the inability to find common ground between the two sides are simply driving up the cost of products, jeopardizing American jobs and threatening the long-term viability of businesses large and small.”
Gold said the continuing shutdowns and congestion are “bringing the fears of a port shutdown closer to reality.”
“Our message to the ILWU and PMA: Stop holding the supply chain community hostage,” Gold added. “Get back to the negotiating table, work with the federal mediator and agree on a new labor contract.”