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West Coast Slowdown Cost Ports Import Share

The overlong slowdown at ports on the West Coast that caused rampant delays sent shippers fleeing into the arms of East Coast and Gulf Coast ports, and West Coats ports ceded their share of container imports.

In May, West Coast ports’ share of imports fell to 45 percent, down from last year’s 51.5%, according to U.S. Census Bureau data, owed largely to shippers’ decisions to reroute their goods to alternate ports just to skirt the muss.

After nine months of negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union over a new labor contract—during which labor slowed to a crawl, caused considerable cargo pileups and even led to suspended operations—the two parties reached an agreement in February.

But port import data reflect the fact that West Coast ports are still feeling the effects of the drawn-out talks.

The Port of New York and New Jersey handled a record volume of container imports in May, indicating that the diversion from West Coast ports is persisting.

According to the Journal of Commerce (JOC), imports at the East Coast’s largest port jumped 13.4% year-over-year in May. And for the first half of this year, East Coast ports increased their share of container imports by 3 percentage points for a 43 percent stake and Gulf Coast ports climbed 1 percentage point for a 6 percent share.

Add to losing market share, some have speculated that the West Coast port dispute could have contributed to the United States’ first quarter GDP slowdown.

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A post by the Board of Governors of the Federal Reserve last week noted that U.S. GDP declined 0.2% in the first quarter of 2015, a much larger dip that analysts expected, and the labor dispute could be at least in part to blame.

The West Coast port conflict started in mid-2014 but the effects on international trade didn’t become apparent until the first quarter of this year, by which time import growth through the West Coast ports was 14 to 20 percentage points lower than growth at other ports.

“The dispute had the most bite in the first quarter, with imports and exports through the West Coast ports plunging,” the Fed post noted. Exports via West Coast ports fell 20.5% in Q1, while imports fell 9 percent. “These are substantially larger declines relative to previous quarters and bigger declines than in shipments through any other mode of transportation.”

According to the Fed, West Coast port import declines during the dispute were largely compensated by reallocation to other ports and an import surge in March following the contract resolution, retracting some of the losses incurred in January and February when conditions reached boiling point.

“A large portion of the rebound was accounted for by imports from Asian economies (China, Japan, and Asian emerging markets), which most often enter the United States through West Coast ports,” the Fed noted. “In addition, the March surge reflected a particularly strong jump in imports of consumer goods, which tend to be sourced from Asian economies.”

Currency fluctuations and weak economies in some parts of the world have also stifled demand for U.S. goods abroad, but economic analysts expect business to return to usual at West Coast ports despite the challenges.