Ben Chesser, Sales Supervisor with OEC Group’s St. Louis office gives insight into how shippers will be able to operate if the West Coast port labor unions strike or stage a slowdown later this year.
What can OEC do for our clients if the ILWU stages a slowdown or strike?
There are a lot of different scenarios being discussed right now, and it really depends on what actually happens on the ground. OEC Group is uniquely positioned in this situation because our diverse book of business not only includes trade lanes from Asia to the U.S. West Coast, but also direct trade lanes from Asia to the U.S. Gulf and East Coasts. Therefore, if the West Coast ports are neutralized due to slowdowns and strikes, our team will be able to offer our clients a wide variety of alternative solutions with minimal disruption.
Is there any chance that East and Gulf Coast ports would follow the lead of L.A.-Long Beach when it comes to strikes or slowdowns?
This is unlikely, based on past negotiations. Ports along the East and Gulf Coasts are looking to improve their contracts, as well, and this is an opportunity for them to step up and demonstrate their capabilities.
What are some problems shippers may experience with a potential East Coast shift?
Large East Coast ports are going to have to battle a dramatic influx of containers, and they will have to contend with the fact that their infrastructure is slightly different than that of a port built to handle Trans-Pacific trade like L.A.-Long Beach. The time to process freight will increase, the time between vessel arrival and vessel berthing will be longer, and transporting cargo to other areas of the country will be more complex. Also, alternative ports with small footprints are going to see carriers terminating service at the gateway, and therefore, they may not offer inland services. In this situation, it’ll be up to shippers and forwarders to organize the final portion of that move.
Will there be any long-term repercussions if this situation does turn into a serious issue?
Most of the long-term repercussions that this may cause have already been put in motion due to the never-before-seen West Coast congestion that has been going on for months. Even if these labor negotiations go as smoothly as possible, there’s still a backlog of ships waiting in San Pedro bay to be processed. There are still lines of trucks waiting to pick up freight at L.A-Long Beach. Retailers have been trying to find warehouse space closer to the coasts, and some retailers are even considering moving away from the West Coast toward the Gulf and East Coasts. One major big box organization made the move to the Gulf a few years ago, and their supply chain has benefitted.
What advice would you give to shippers as we move closer to negotiations?
Be cautious of anyone that says they have the one right answer for any impending issues. That’s impossible. Congestion, slowdowns, or strikes have a similar effect to a car accident. Someone watches the news, they see there’s a car accident along their normal route, and they change course. Everyone else that watches the news makes that same decision. Now, the next highway is clogged with traffic. People move onto the next roadway, and on and on. Shippers should be working with an experienced logistics expert to determine how agile their supply chain strategy is and whether or not they have planned far enough ahead to absorb necessary adjustments. Those that do will have nothing to worry about.