Congestion at West Coast Ports – How Much is it Costing the US Economy?
Negotiations continue for a new contract between the International Longshore and Warehouse Union and employers represented by the Pacific Maritime Association. The negotiations cover 29 U.S. West Coast ports, including all the major West Coast container ports — Los Angeles, Long Beach, Oakland, Portland, Seattle and Tacoma.
“Congestion at a port terminal in Southern California”
Congestion – as a result of the stalled negotiations – has been building since the fall of 2014 and is currently reaching a tipping point. To highlight two recent examples of additional costs or lost revenue due to port congestion:
- Fuji Heavy Industries Ltd, the Japanese-owned maker of Subaru cars, is flying key parts (rather than shipping through west coast ports) to its U.S. factory. Fuji claims flying versus tradition ocean/liner transportation would cost an extra 7 billion yen ($59 million) a month.
- On the export side – Leimgruber Farms in Holtville, California normally exports two or three 20-ton loads of alfalfa hay and grasses weekly. Now, they’re forced to stockpile it or sell it cheaper domestically due to the lack of export space at Southern California ports. Customers of Leimgruber Farms have canceled orders, and there is fear those customers may never come back. Similarly – a trucking company used by the farm usually sends 24 loads of goods to the ports each week. Those volumes have dropped to five and all drivers, save for a few, have been laid off.
Palisades Logistics – a nationwide provider of 3PL warehousing, fulfillment and distribution services – will continue to monitor the west coast port issues. Already, Palisades Logistics’ 3PL warehouses on the east coast – namely New Jersey, Baltimore, Charlotte and Savannah – have seen increased inventory and activity levels as shippers have diverted inventory to the east coast in order to bypass the west coast port congestion.
Additionally – Palisades Logistics has seen an increase in requests for transloading and crossdock services in Los Angeles, Oakland, Portland and Seattle as shippers are looking to expedite freight to its final destination once product has been unloaded at the ports.
Palisades Logistics’ expert knowledge of the logistics and supply chain industry was developed over decades connecting manufacturers and shippers to premier public distribution centers and transportation specialists in the United States and Canada. The network is known for providing logistics and supply chain solutions to Fortune 500 companies and smaller shippers with high standards for customer service, value, and safety. Palisades Logistics works within the supply chain to improve financial performance and provide the highest levels of customer satisfaction.
For more information about Palisades Logistics, please contact us at 973-331-8220 or via this website using our Contact Form.