SOCAL PORTS: Recent ocean freight reports from around the country suggest that more cargo is being steered away from Southern California, the nation’s largest port complex, to alternative ports, mostly on the East Coast. Cargo moves, measured as industry-standard 20-foot units known as TEU, fell 2% at Los Angeles last month, the nation’s largest port reported on July 15.
Neighboring Long Beach reported a 4% drop one day later. Los Angeles totaled 721,802 TEU, while Long Beach reached 583,621, including a combined 5% drop in imports. Meanwhile, June shipments through Seattle and Tacoma, Washington, rose 7% to 344,000 and 14% at Charleston, South Carolina, to 169,000, according to mid-July statements from those ports. June shipment totals haven’t yet been announced for New York-New Jersey, Savannah, Georgia, and Norfolk, Virginia-area ports.
Shipments rose 13% or more during May at all three ports, totaling more than 1.1 million TEUs and far outpacing Southern California’s growth pace in that month. Meanwhile, two indicators of activity at major U.S. ports suggested an overall increase of about 5% last month. Cass Information Systems and INTTRA, an ocean shipping consultant, last week said nationwide cargo rose 4.8%. The Global Port Tracker report published by the National Retail Federation and consultant Hackett Associates projected 5.5% growth.
Robert Salmon, a Deutshe Bank analyst, in a July 21 report said the disparity could be potentially caused by “additional shipper supply chain adjustments to bring more product into the U.S. East Coast, Gulf Coast, Canadian, and Mexican ports.” Salmon also said the June Southern California totals may have been altered by the timing of large vessel arrivals. International cargo flow has broad implications for trucking and the economy, Salmon noted. “If imports fail to strengthen in the coming months or show stronger performance at other U.S. ports in June, economic expectations will likely need to be tempered further for the second half of 2015,” he said. “The June California import data is a negative data point for the truckers [and transportation demand more broadly].”
He noted a strong correlation between import activity and American Trucking Associations tonnage index. Long Beach’s statement cited a different factor for its year-over-year decline. “June 2014, the month against which June 2015 is being compared, was particularly busy, as shippers prepared for the expiration of the longshore labor contract,” the July 16 statement said. The International Longshore and Warehouse Union’s contract with the Pacific Maritime Association expired on June 30, 2014.
As contract talks continued, cargo slowed through Southern California late last year and early in 2015. Seattle and Tacoma’s July 17 statement said its totals are rising because “cargo has been re-routed through the ports of Seattle and Tacoma as other U.S. West Coast ports continue to struggle with congestion stemming from the contract negotiations between the PMA and ILWU earlier this year.”
In addition, the Federal Maritime Commission is investigating chassis supply issues focused on Southern California. The federal agency is assessing whether a chassis inspection agreement between the union and an association of ocean carriers such as Maersk Line and CMA-CGM, the two largest, violates federal law. Port truckers led by American Trucking Associations’ Intermodal Motor Carriers Conference want an end to union chassis inspections. Truckers argue that the union has no right to inspect chassis because the equipment is owned by leasing companies that aren’t party to the contract between the ocean carriers and the ILWU.
Labor troubles also surfaced July 21 with another strike against Pacific 9 Transportation, a Southern California drayage carrier where Teamster-backed organizers are trying to convert drivers from independent contractors to employees. Employees can become union members, but contractors cannot.
