Cargo congestion at West Coast ports Los Angeles and Long Beach could stand to set retailers back in terms of holiday season supply as goods aren’t getting shipped on time, with some even seeing up to 10-day delays.
Some are calling the port backup the worst shipping crisis in ten years—loaded cargo vessels are simply waiting off the coast for cargo collecting dust on the docks to be cleared. And because of the sizeable backlog, there’s no telling—or controlling—when the vessels will be able to offload.
The process for getting goods out of the two ports is now taking seven to 10 days longer than normal, Jonathan Gold, the National Retail Federation (NRF) vice president for supply chain and customs policy told the Los Angeles Times. The delays are causing increased costs for retailers and many are working to reroute their goods to ports in the Gulf Coast, Pacific Northwest, Canada and the East Coast in every effort to get goods on shelves in time for the holidays.
A surge of cargo coupled with a shortage of trailers to haul the cargo contributed to creating the congestion. The Port of Los Angeles reported earlier this month its September containerized cargo volumes increased 9 percent over the same time last year, the port’s busiest single month in terms of volume since 2006. Total cargo for September came to 775,133 twenty-foot equivalent units (TEUs), and container imports were up 11 percent to 370,786 twenty-foot equivalent Units (TEUs) while exports remained relatively flat. Import volume at the Long Beach port was up 10.2%.
Related Stories
Cargo volume doesn’t directly correlate with sales, but according to NRF, it’s a barometer of retailer’s expectations. NRF is forecasting 4.1% holiday season sales growth and 3.6% growth for the year overall.
Shortage of trucking equipment, or chassis, has also been cited as contributing to the backlog, as has a shortage of truck drivers.
Cherry Donaldson, operations manager for freight forwarding firm Aqualine International Inc., which processes product through both ports, said port workers aren’t flipping the chassis quickly enough and that truckers are having to wait hours to for access to one. At times, truckers have even been told there are no available chassis. Drivers who have to stay at the terminal all day without being able to collect cargo, are not getting paid for the day’s work and many have forgone the jobs, Donaldson said.
“We have shipments that are coming in and we have no truckers to go and pick them up. Trucking companies who are still taking orders, the ones who have drivers that are still working for them, are not taking any new orders because they are so backlogged,” Donaldson said. “It’s affecting the holiday import in a big way, we don’t know what is going to happen. It is just getting worse and worse every week.”
NRF said, however, outside of the equipment and driver shortage, that the ongoing West Coast port contract negotiations have also played a role.
The labor contract between the International Longshore Warehouse Union (ILWU), which represents the dockworkers, and the Pacific Maritime Association (PMA) expired on July 1, 2014, and negotiations have continued on. Maintenance of health benefits (MOB) has reportedly been a point of contention in the talks, and despite a joint statement from the ILWU and PMA in August, noting the parties had reached tentative agreement on terms for health benefits, a final contract has yet to be settled. The Los Angeles/Long Beach seaport handles 40 percent of U.S. cargo, so setbacks there could mean rampant delays for retailers across the nation.
A spokesperson for the PMA said the contract is still under negotiations and there is nothing to add at this time.
“Increasing congestion at the nation’s ports as well as the ongoing West Coast labor negotiations are ongoing concerns and retailers are making one last push to make sure they’re stocked up for the holidays,” NRF’s Gold said in a statement earlier this month.