Subscribe to our free, weekly email newsletter!


West Coast port labor situation weighs on Peak Season prospects

By Jeff Berman, Group News Editor
July 21, 2014

In recent years, when it comes to freight transportation and logistics market changes, there have been a few constant themes: an uncertain economic outlook, varying levels of employment in the United States, and slowly recovering housing and automotive markets, among others.

Another emerging trend in recent years has been the absence of a traditional Peak Season, due to the aforementioned items above, as well as others that have been prevalent like low GDP output and fairly low inventory levels, too.

But things have the potential to be somewhat different in 2014. One major reason for that has to do with the ongoing contract negotiations between the Pacific Maritime Association and the International Longshore Warehouse Union, which center on wages and benefits and job security, among others, for the roughly 14,000 port workers (that are ILWU members) in California, Washington, and Oregon and 20,000 total workers at the 29 West Coast. Contract talks are still ongoing. 

These negotiations, as reported by LM, have resulted in shippers being proactive in the event of a possible port strike that would have the potential to result in delays for hundreds of millions of dollars in cargo for west coast ports and the economy, as was the case during a ten-day work stoppage in 2002. Should something similar occur this time around, it stands to reason shippers have learned from the past, based on very high import numbers at the nation’s two largest ports in Los Angeles and Long Beach, which together handle more than 40 percent of U.S. incoming container traffic moving through West Coast ports. In June, POLA and POLB saw annual import gains of 16.5 percent and 382,666 TEU (Twenty-foot Equivalent Units), and 8.8 percent at 610,516 TEU, respectively.

Even with potential labor gridlock on the horizon, the findings of a Logistics Management reader survey found that there is increased optimism towards a 2014 Peak Season.

The survey, which polled 103 buyers of domestic and global freight transportation and logistics services, found that 68.1 percent expect a more active Peak Season compared to 2013, with 25.0 percent expecting it to be the same, and 6.9 percent calling for it to be less active. The optimism was apparent considering that in 2013 barely more than half of the survey’s respondents, at 51.1 percent, expected a more active Peak Season.

What’s more, the survey found that the impact of Peak Season on day-to-day operations is not to be understated, with 45.8 of respondents describing the impact at very significant, 44.4 percent calling it somewhat significant, and a mere 9.7 percent viewing it as not very significant.

Among the reasons cited by respondents for increased Peak Season activity were increasing volumes and a better general overall outlook for the U.S. economy. Conversely, though, things possibly standing in the way included things like capacity-related issues.

A bulk ingredients distributor said that there seems to be a general shortage of equipment already, adding he does not have a hard time envisioning that could lead to certain lanes in the fall getting “ugly,” and a retail shipper observed that there is a fair amount of anecdotal evidence in the market pointing to many carriers reaching capacity before his company’s Peak Season truly arrives.

As for shippers not expecting much in the way of a true Peak Season, many of the reasons for that echoed past years, including not enough long-term evidence of an improving economy and the uncertainty of the West Coast port labor situation.

“The Peak Season really has been a question mark in recent years,” said Philip Sanfield, Port of Los Angeles director of media relations. “There are many factors at play with the economy, shipping alliances, and the port labor talks. There are lots of things in play, with a bit of uncertainty as to how things will shake out at this point in our opinion.”

Ben Hackett, founder of maritime consultancy Hackett Associates, said that with a fair amount of inventory coming into the U.S. earlier than usual, as evidenced by early volume gains at the ports of Los Angeles and Long Beach, this year’s Peak Season is likely to resemble those in past years and be flat.

“That is what it feels like at the moment, with inventories up earlier than usual at this point of the year,” he said, adding that he believes that “the inventory-to-sales ratio will continue to decline as a result of higher consumer spending and the impact of potential west coast port disruptions, and while there may not be a major Peak Season due to the high levels of inventory, goods will continue to flow.”

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

While the economy has seen more than its fair share of ups and downs in recent years, 2014 is different in that it could be the best year from an economic output perspective in the last several years. That outlook was offered up by Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics Report at last week’s CSCMP Annual Conference in San Antonio.

Matching last week, the average price per gallon of diesel gasoline dropped 2.3 cents, bringing the average price per gallon to $3.755 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

A number of key topics impacting the freight transportation and logistics marketplace were front and center at a panel at the Council of Supply Chain Management Annual Conference in San Antonio last week.

The relationships between third-party logistics (3PL) service providers and shippers are seeing ongoing developments due in large part to the continuing emergence and sophistication of omni-channel retailing. That was one of the key findings of The 19th Annual Third-Party Logistics Study, which was released by consultancy Capgemini Group, Penn State University, and Korn/Ferry International, a global talent advisory firm.

Optimism in the form of increasing profits was a key takeaway in the Annual Survey of Third-Party Logistics (3PL) CEOs, released earlier this week at the Council of Supply Chain Management Professionals (CSCMP) Annual Conference in San Antonio.

Article Topics

News · Peak Season · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA