Port backlog could last 3 months

Updated: 2015-02-24 12:09

By Paul Welitzkin in New York(China Daily USA)

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It will take two to three months to clear a backlog of cargo following a tentative settlement between shippers and dock workers at US West Coast ports, and shippers in Asia and importers in the US will start to consider alternatives to the ports, observers said.

The ports of Los Angeles and Long Beach are key entry points for products from China and Asia. They have been operating at reduced capacity since last October as dockworkers slowed cargo and employers cut shifts. Sung Won Sohn, an economics professor at California State University Channel Islands and a former port commissioner in Los Angeles, said a few months will be needed to reduce the cargo backlog.

"I assume it will take about three months to address this issue," Sohn told China Daily in an interview. "They will focus on moving out the perishable goods first and then move on to the other products and merchandise."

Jock O'Connell, international trade economist with Beacon Economics in Los Angeles, agreed. "You have about three to four dozen ships waiting outside of Los Angeles and Long Beach right now," he said in an interview.

O'Connell said virtually all the container traffic on the West Coast occurs at the ports of Los Angeles, Long Beach, Oakland, Portland, Seattle and Tacoma, Washington. Sohn said about 40 percent of all goods in the US come through Los Angeles and Long Beach and about half of that is from China.

On Feb 20 the months-long labor dispute was settled between the Pacific Maritime Association, which represents shipping companies and port operators, and the International Longshore and Warehouse Union, which represents West Coast dock workers. The workers must still ratify the tentative agreement.

Noting that this is not the first time labor tension has affected shipping on the West Coast, O'Connell and Sohn said shippers in Asia and importers in the US will at least initially consider alternatives to the West Coast ports.

"I think most major shippers and importers will be looking at other ways to get their products to North America," said O'Connell. "At least immediately following this they will be looking at diversifying their points of entry."

"One big alternative is the Panama Canal which will be able to handle bigger ships starting in 2016," Sohn said. "By going through the canal, ships can use Gulf (of Mexico) ports like Houston."

O'Connell said that West Coast ports still provide the most attractive way for Asian exporters to get their products into the US.

"When the West Coast ports are operating efficiently they offer the most cost-effective way to get products from china to Cleveland or Atlanta," he said.

A combination of a work slowdown initiated by dockworkers in November, shipping companies limiting the loading and unloading of vessels to daytime shifts to avoid paying overtime and problems involving moving large amounts of cargo from bigger ships have combined to create a backlog of merchandise and containers.

O'Connell said the backup probably won't affect the US economy that much. "I think some of the effects from the backup have been exaggerated a bit when talking about the US economy," said O'Connell. "It really depends on where you become involved. If you are a fruit exporter to China and your produce is in danger of spoiling while waiting to be loaded on a ship bound for China, then it's a big deal. But if you are Wal-Mart and have the resources to adjust to the delays, it's not that bad."

Sohn said California is aware of the economic importance that the ports of Los Angeles, Long Beach and Oakland have on the state and the local areas.

"I think everyone recognizes that the ports are an important economic engine and I know that the shippers, port officials and the workers will address the issues to keep that merchandise flowing efficiently," he said.

paulwelitzkin@chinadailyusa.com

 

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