US manufacturers, exporters and retailers face months of continuing supply chain disruption from the after-effects of a simmering labour dispute despite a return to work at west coast ports that had been in “gridlock”.
The world’s biggest container shipping line, port authorities and railroads all warned that conditions would remain difficult for months as workers set about clearing vast backlogs of containers after a tentative agreement over a new five-year contract was reached late last week.
The deal between the Pacific Maritime Association, representing employers, and the International Longshore and Warehouse Union followed nine months of talks.
The dispute resulted in more than three months of unofficial go-slow operations that produced what employers at ports in California, Oregon and Washington have called a gridlock, and raised concerns about a permanent loss of cargo.
Employers ordered normal levels of workers for the night shift on Saturday for the first time in three weeks following the agreement, which was brokered by Tom Perez, the US labour secretary. The employers halted work both the previous weekends to avoid paying a weekend premium to workers whose productivity, the employers said, were at near-strike levels.
Maersk Line, the world’s biggest container line and part of Denmark’s AP Møller-Maersk, noted that there were unusually high numbers of loaded export containers waiting at US ports to head towards Asia.
There were also scores of ships waiting offshore to unload — including 23 container ships off the twin ports of Los Angeles and Long Beach — and significant pent-up demand to move goods that are likely to produce a hard-to-manage spike in shipments.
“We will be making decisions that are in the best interests of shippers and the best interests of the longer-term recovery,” the company said.
The Port of Tacoma, one of the public-sector bodies that rents land to private-sector container terminal operators, also expressed concern about a looming flood of incoming containers.
“The biggest challenge will be the influx of imports we expect to see,”
the port in Washington state said.
The Port of Long Beach was similarly cautious about the capacity for handling new incoming goods when most terminals were nearly full. It suggested, however, that the current Lunar New Year holidays in Asia might provide a lull in new import arrivals that would ease problems.
“The terminals are at about 90 to 95 per cent capacity, so part of the issue will be moving containers and cargo off to make room for the ships at anchor,” the port said.
BNSF, one of two big railroads serving West Coast ports, said it would “unravel slowly” the operational restrictions it had placed on movements to the facilities.
“We will undo . . . restrictions to match production capabilities of marine terminals,” it said. “But there is a lot of pent up inventory for the terminals to work through both westbound and eastbound, so changes are not expected to be sudden or large scale.”
While the agreement averted a complete shutdown of the West Coast ports, which handle more than half the US’s container trade, there remained calls after the deal for a rethink of the ports’ operations as well as the arrangements for negotiating new contracts.
Recent disruptions resulted partly from the expiry of the two parties’ previous contract on July 1 and the consequent collapse of arrangements meant to ease local, short-term disagreements between employers and labour.
Matthew Shay, chief executive of the National Retail Federation, said it was vital to ensure the recent months’ “nightmare scenario” was not repeated.
“If we are to truly have modern international trade, supply chain and transportation systems, we must develop a better process for contract negotiations moving forward,” he said.
The winter of unrest on west coast ports has also spilled over into Canada, where the country’s biggest railroad, Canadian National, said on the weekend that it was preparing for a potential lockout of 4,800 train drivers from late on Monday over a wages and conditions disagreement.
The looming stoppage at Canadian National — which had benefited from diversions because of the port disruption in the US — follows a two-day
strike on February 15 and 16 by drivers for Canadian Pacific, CN’s biggest
Canadian rival, which ended with the two sides agreeing to accept binding
Canadian National said in a statement on Saturday that “the stakes are high now”, noting that the railway was “a true backbone of the economy”, transporting more than $200bn worth of goods across a rail network spanning Canada and mid-America.
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