By Sourcing Journal
This article was published in Sourcing Journal November 16, 2022.
The Port of Los Angeles said Tuesday it handled 678,429 twenty-foot equivalent units (TEUs) in October, which reflected a 25 percent decline from a year ago. The fall was driven by declines across both imports and exports and marked the lowest October volume since 2009.
Port of Los Angeles executive director Gene Seroka attributed the month’s “steep decline” to three main factors, including an earlier peak shipping season and a fall-off in purchases of big-ticket items, such as washers and dryers, that was seen during the pandemic.
“The biggest [factor],” Seroka said during a Tuesday media briefing in discussing drivers behind the decline, “is cargo that has shifted to the East and Gulf coasts due to protracted labor negotiations.”
The International Longshore and Warehouse Union (ILWU), representing about 22,000 West Coast dockworkers, began negotiations with employers, represented by the Pacific Maritime Association (PMA) in May, ahead of the July 1 expiration date of the previous contract.
Los Angeles container terminals are now working at about 70 percent capacity with the decline in cargo volume.
During Tuesday’s briefing, outgoing Los Angeles Mayor Eric Garcetti urged workers and employers to “get the labor piece, an agreement, done.”
“And I would really encourage both sides do that sooner than later because one thing you agree with here, whether you’re a West Coast operator or whether you’re a West Coast union, is you want to keep that business on the West Coast,” he said.
Garcetti, along with Seroka, were both called on to be involved in the prior round of extended labor negotiations in 2004. The breakdown in past negotiations led to a slowdown in cargo movement at West Coast ports, prompting then-President Barack Obama to intervene.
The ILWU and PMA have publicly stated this year their commitment to getting a deal done while avoiding any disruptions to cargo movement.
“We were all optimistic [a new deal] would be done just after Labor Day,” Garcetti said of the current negotiations. “It’s now dragged on a couple of months [more]. Let’s knock this out.
Let’s get it done. Let’s figure it out, whether that means some overnights as we’ve done to get our past strikes avoided…. Let’s get that done. That’s number one.”
Surging volumes at East and Gulf coast ports have prompted questions about the long-term competitiveness of the West Coast. Seroka waived off the idea of there being any concern about lost revenue to competing ports, such as the Port of New York and New Jersey, when asked about it Tuesday.
The East Coast seaport in September was the country’s busiest port for the second month in a row, with 842,219 TEUs handled. September, the most recent data available, represented a nearly 35 percent increase in volume from the same month in 2019.
“We’ve been in the number one position here in the United States for 22 consecutive years. One or two months is not going to create a trend,” Seroka said.
Even still, he detailed his recent trips to different parts of the country, Asia and Europe to speak with shippers and carriers to ensure cargo returns to Los Angeles.
“This whistlestop tour and knocking on doors is not going to stop until we bring this cargo back,” Seroka said. “But it does start with giving confidence to the marketplace through a labor agreement. And, of course, even though both sides, the PMA and ILWU, have put out two jointly signed media releases stating they will not strike nor lock out there’s still skepticism. That’s why this has got to be anchored and bring that marketplace back to a level where they feel that certainty of the cargo flow and getting to market on time.”
Garcetti struck an optimistic tone for the port long term, not only due to its proximity to Asia for the fastest shipping route, but also the green efforts he said offer shippers a competitive advantage as consumers push companies to be more sustainable.
Additionally, he characterized the current disagreements over remaining issues between the union and employers as “so much more minor than past years.”
“I’ll just say this: 21 years of experience, there will not be a strike here and there will be a resolution,” Garcetti said. “I know the players. I know their hearts. I know they’ve got some issues that aren’t worked out and can sometimes seem dramatic at the end, but I have great confidence in that.