February volumes at POLA and POLB are down annually

Not surprisingly, February volumes at the Port of Los Angeles (POLA) and Port of Long Beach (POLB) were down on an annual basis in February, as the months-long labor dispute between the Pacific Maritime Association and the International Longshore & Warehouse Union, which impacted freight flows and port operations in the form of terminal congestion and related supply chain challenges, came to an end with the parties reaching a tentative five-year contract agreement on February 20.

Total POLA volumes in February were down 10.2 percent compared to February 2014 at 502,663 TEU (Twenty-Foot Equivalent Units).

POLA imports, which are primarily comprised of consumer goods, dipped 10.7 percent at 254,225 TEU, while exports fell 10.3 percent to 131,806 TEU. Empties were off 9 percent at 116,631 TEU.

“Cargo flow has improved since the end of February and throughout March,” said Port of Los Angeles Executive Director Gene Seroka in a statement. “ILWU labor is back strong at our terminals. The new interoperable chassis fleet is up and running.  We’ve seen promising results in conjunction with initiatives like the cargo “peel off” program and testing activity around Cargomatic, a company working to create a more efficient method of dispatching trucks to terminals. Additionally, the Federal Maritime Commission’s approval of a working agreement is enabling the San Pedro Bay ports to convene stakeholders in the coming weeks to discuss additional solutions that will put this backlog behind us.”

While the PMA and ILWU have reached a tentative agreement, more work remains to ensure cargo is moving fluidly into and out of West Coast ports.

When the parties initially reached a deal in late February, industry estimates suggested it would take about two months to clear out the cargo backlog. Ben Hackett, founder of maritime consultancy Hackett Associates told LM That he expects that ships will discharge very rapidly, resulting in backlog getting cargo out of the ports. To augment things, though, he said large alliance carriers will make better use of terminals in an effort to be more efficient, adding that even with the labor disruption there were some West Coast port terminals that were relatively empty.

POLA Media Relations Manager Philip Sanfield said that while operations are improving at the port, it remains a slow process.

“Things are slow but steady would be a good way to describe it,” he said. “There is a lot of labor working, but there is also a lot of more work to do. Nearly every one of our berths is filled with a ship, and getting full labor on each one at all times is a bit of a challenge because there are so many berths and so many ships and container in the port complex at LA and Long Beach. We are working day and night. The chassis fleet is working well, and we are hearing good things since it went live, but there is probably more tweaking that needs to be done to make that improve things. There is a lot more work that needs to be done in the form of collaboration between the port and its stakeholders to relieve congestion as quickly as possible. We are working on long-term solutions to make sure the LA advantage remains in terms of our competitiveness.”

Sanfield added that POLA can handle up to 18 container ships at berth at any given time.

Even with labor peace apparently intact, there remain ships at anchor waiting for berths at POLA. As of yesterday, there were 26 container vessels waiting for a berth between POLA and POLB, said Sanfield.

The amount of time ships are waiting is lower than it once was, with ships being turned around more quickly, with Sanfield noting that should be reflected in improved March volumes.

Port of Long Beach volumes: At POLB, February volume was off 20.1 percent annually at 413,114 TEU.

Imports were down 24.7 percent at 204,462 TEU, and exports fell 22.9 percent at 110,711 TEU, with empties off 3.9 percent at 97,941 TEU.

“The congestion issues that worsened in February played the biggest role in the cargo declines, just as they did in January, which had seen an 18.8 percent drop from the same month last year,” said POLB officials.  “However, the outlook is more promising. By the end of February, a tentative new contract for dockworkers was announced, federal regulators granted permission for Long Beach and its neighbor the Port of Los Angeles to collaborate on congestion relief, and private chassis fleets in the region agreed to pool their resources.”

KeyBanc Capital Markets analyst Todd Fowler wrote in a research note that February import volumes reflect on-going port congestion and labor disruptions, which plagued import activity during the month, as well as the timing of the Lunar New Year (February 19 in 2015 compared to January 31 in 2014).

“With a tentative labor agreement in place, we expect overall throughput to be above seasonal levels in March and potentially 2Q15 as backlogged freight is cleared, and return to more normal levels in the ensuing months,” he wrote.