Apr 8, 2015

Normalization of LA/LB still takes time despite eased demurrage

Long Beach port

The state of ships held up at Los Angeles (LA)/Long Beach (LB) ports has been seeing improvement since a temporary agreement was reached with regard to a new labor agreement for North America West Coast ports. While approximately 30 ships had been put on hold at sea at the two ports in mid-March, that number had dropped to seven ships as of April 5. Existing problems, such as the shortages of chassis and truck drivers, continue to remain unresolved, however, but port authorities for both ports continue to advance measures for solutions. In addition to the port authorities allowing chassis leasing companies to mutually facilitate equipment in March, they have also convened conferences for those concerned people to have a dialogue in search of solutions to the congestion problem. Meanwhile, some local forwarding officials are claiming that they fail to see the mutual accommodation of chassis is not functioning properly at the current stage, meaning it could take time before any actual results are seen. Port authorities executives state that they anticipate seeing normalization to operations by the end of May, and that they are currently focusing all energy on their top priority, namely alleviating accumulated cargo.

In addition to a dearth of chassis and drayage trucks, the prolonged labor-management negotiations for a new labor contract had had the North America West Coast port congestion rapidly worsen since fall of 2014. Accumulation of cargo at container yards and prolonged cargo handling times for service vessels had become a serious issue at LA/LB ports as well. However, West Coast port employer group Pacific Maritime Association (PMA) and port worker union International Longshore & Warehouse Union (ILWU) reached a tentative agreement regarding a new five-year labor contract on Feb. 20, revealing signs of alleviation of port congestion.

According to the LB port's official release, the number of ships put on hold around the two ports had decreased to 11 units as of March 30 from a most recent high of 28 as of March 14. As of April 5, there were only seven ships kept waiting at the ports, none of which were to enter Los Angeles. Time required at port, according to one port official, has also seen improvement from the approximately nine days it took when congestion levels were at their highest between last autumn and the end of last year. There had also been an accumulation of empty boxes and stuffed export containers at inland depots and at terminals, all to be blamed on delayed schedules of mother ships. One local forwarder has stated, however, that while some terminals are still temporarily putting restrictions on accepting import cargo, the situation appears to be gradually improving overall as the number of excess export and empty containers is gradually getting smaller. One terminal operating official has stated that accumulated cargo levels are expected to be dealt with sometime this month. Port authority executives are also exhibiting determination, and have stated that they are currently focusing all their efforts on eliminating the accumulated cargoes.

Problems such as an insufficiency of chassis and truck drivers, however, still persist, and now there are also strong concerns over a possible shortage of port workers as operations begin to normalize, according to local forwarding officials.

As a measure to address congestion, the LA/LB port authorities last month organized a 'grey chassis pool' represented by three major leasing companies at the two ports and commenced mutual accommodation of chassis. The three companies combined are capable of mutually accommodating approximately 82,000 chassis, and the goal behind the move is to eliminate the chassis imbalance between the two ports and improve flexibility of their usage. In addition, L/B port has also acquired an additional 3,000 chassis in preparation for the peak season. The twin ports have also acquired approval from the U.S. Federal Maritime Commission (FMC) to put together a cooperative working forum to alleviate and prevent future congestion, and to improve supply chain efficiency. The first meeting under the setup was held on March 23.

Still, one local forwarding official has raised concerns, stating that the grey chassis program has yet to prove its effectiveness. Port authority officials have also stated that they continue to move forward with various measures, and that while there has been some improvement, normalization is not expected to happen until at least May, indicating that it may be some time before results are seen.

* New agreement to be ratified in May

ILWU conducted a representative vote during an executive meeting on April 3, which resulted in it its approval of the new five-year labor agreement that was tentatively agreed upon in February. A total of 90 ILWU representatives were gathered, and a ballot was held following a thorough examination of the content of the tentative labor agreement, the result of which was 78% voting in favor of acceptance. A vote by general union members will be conducted on May 22, but ratification is a virtual certainty now that it has been approved by executive members.

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