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West Coast Port Imports Drop 25% in January, with No End in Sight for Work Slowdown

Imports coming through the Los Angeles-Long Beach port complex, the largest container gateway in the Americas, fell 25 percent in January compared to the same month a year ago, according to import/export reporting service PIERS. The labor impasse between the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) that began nine months ago remains unresolved and  work slowdowns continue to increase congestion and backlogs at West Coast ports.

Loaded imports into Los Angeles fell by 30 percent in the month, while those into Long Beach and Oakland dropped 25 percent and 32 percent, respectively. Importers, not willing to risk late deliveries, diverted shipments to the East Coast. Loaded imports rose 26 percent in Savannah, 19 percent in Charleston, 9 percent in Norfolk and 5 percent in New York-New Jersey. Shippers are also reporting heavier-than-normal activity in Vancouver, Canada.

According to a PIERS customer advisory issued last week: “Port congestion and related issues have escalated to a point where they may be limiting import volume growth — re-routing and other countermeasures cannot make up for the lost capacity.”

Even Congress has taken notice. Sources in Washington say that a Senate subcommittee met on Tuesday to investigate the port congestion, the first time this topic has been officially discussed on Capitol Hill, and evidence of legislators’ concern over the potential impact on economic growth.

This past weekend, arrivals were suspended at West Coast ports in an effort to clear freight backlogs from the ports. Approximately 40 container ships were anchored up and down the west coast on Friday, awaiting berths. A port spokesman in Tacoma said there would soon be no space in the Puget Sound for all the anchored ships. Some retailers and importers have complained that shipments that once took two to six days to unload were now taking up to 3 weeks.

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Productivity at the ports began to slow in late summer, two months after the union and employers failed to agree to a new contract, but the severe backlog didn’t start to pile up until November, according to sources in the shipping industry.

Although labor negotiations are ongoing, no agreement seems imminent. Last week the Pacific Maritime Association held a press conference in which it laid out the details of some major concessions it had made in its most recent offer to the union. The union, it is reported, is now asking for the power to unilaterally remove arbitrators.

While the international trade community is anxiously awaiting the next move from either side, the U.S. retail industry is bracing for more delayed shipments of merchandise, and lost sales and profits as it gears up for the Spring selling season. In a report released last week, retail Consulting Firm Kurt Salmon put the cost to retailers of the months-long West Coast slowdown at $7 billion. The figure includes both the higher cost of re-routing shipments and the lost sales from the delayed arrival of goods.