2014 Newsmakers: West Coast Ports’ ‘Perfect Storm’
For many retailers and apparel importers, this holiday season didn’t turn out to be very merry and bright.
Some of the worst cargo congestion seen in a decade hit the ports of Los Angeles and Long Beach right when important holiday merchandise needed to be in warehouses and on store shelves to meet demand for the busiest shopping season of the year. From September onward, several factors converged to form what everyone has been calling “the perfect storm.”
First, the shipping lines decided to get out of the chassis business, creating a chassis shortage and chaos in quickly finding a chassis on which to load cargo containers. Then huge cargo-container vessels carrying as many as 13,000 containers, instead of the normal 8,000 to 9,000 cargo containers, started calling at the ports, making it harder to unload merchandise and get ships off to their next destination very quickly. Cargo containers have been stacked so high on the docks that extracting a container has become as complicated as figuring out a Rubik’s Cube.
To add to the turmoil, the six-year contract between the International Longshore and Warehouse Union and the Pacific Maritime Association expired on July 1. Contract negotiations were still going on by early December, but the PMA—made up of the shipping lines and terminal operators that employ the nearly 20,000 longshore workers covered by the contract at 29 West Coast ports—were complaining about work slowdowns.
The result has been cargo-container chaos. Berths have been so backed up that at any one time there were five to 10 cargo-container ships anchored beyond the breakwater waiting for space to dock. Some ships were parked on the water for as long as one week.
It has taken as much as two weeks to get containers off the docks and then days longer to load them onto railcars. Many importers opted to pay extra money to have their cargo transported more quickly by trucks instead of waiting for space on the railroads.
Several importers are expecting to lose millions of dollars in lost orders because many retailers became impatient and canceled their orders.