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    Two Visions of America by Don Jans

    Unplanned L.A. Port Closure Likely to Accelerate Business Flight From West Coast


    Last week, the largest West Coast port — the Port of Los Angeles — along with the Port of Long Beach experienced an unplanned 24-hour closure. The ports closed because dock workers simply didn’t show up, leaving the Thursday night shift and the Friday day shift unmanned.

    The International Longshore and Warehouse Union issued a statement saying workers not showing up for their shifts was no big deal:

    On the evening of Thursday, April 6, 2023, International Longshore and Warehouse Union (ILWU) Local 13 held its monthly membership meeting as is its contractual right. … Several thousand union members attend the monthly meeting.

    On Friday, April 7, 2023, union members who observe religious holidays took the opportunity to celebrate with their families.

    The Pacific Maritime Association (PMA), which represents the terminals, had a different take on the situation. On Friday, the PMA stated:

    The largest ILWU local on the West Coast has taken a concerted action to withhold labor at the Ports of Los Angeles and Long Beach, resulting in widespread worker shortages. A majority of the jobs for last night’s shift went unfilled, including all jobs for cargo-handling equipment operators needed to load and unload cargo. The workers who did show up were released because there was not a full complement of ILWU members to operate the terminals.

    ILWU Local 13 withheld labor again for this morning’s shift. The action by the Union has effectively shut down the Ports of Los Angeles and Long Beach – the largest gateway for maritime trade in the United States.

    Global supply chain news site FreightWaves observes that “Labor action at West Coast ports does not have a history of being explicitly confirmed; rather, it takes the form of passive-aggressive behavior that escalates with increasingly implausible deniability.” FreightWaves predicted the unofficial union action would have long-term consequences for the ports:

    The Port of Los Angeles’ sales pitch to importers in recent months has been: We have plenty of capacity now. No more ship queues. The port labor contract expired July 1, 2022, but there has been no major disruption to imports during negotiations on the new contract. No need to ship your goods all the way through the Panama Canal to the East or Gulf coasts. Come back to LA!

    That sales pitch, to the extent it ever worked, died on Friday. …

    One [exporter of agricultural goods] had 10 trucks turned away from the Port of Long Beach on Thursday night, with containers of goods having to be stored at a yard near the port. This exporter incurred an added cost of $20,000, leading to a substantial loss on the international sale.

    The LA/LB ports began losing considerable business during the COVID-19 shutdowns when supply chain interruptions became severe and product bottlenecks started piling up. Red coastal states like Florida and Texas, which reopened more quickly than lockdown-loving blue states, took advantage of the situation by beefing up their marine infrastructure and courting shippers.

    Another thing that’s changed is that it’s now easier for importers to run ships from Asia to Gulf and East Coast ports. FreightWaves explains:

    The landscape for Asia-U.S. supply chains is much different today, courtesy of what happened after the last ILWU-PMA contract negotiations: the debut of the larger Panama Canal locks in 2016 and the concurrent expansion and dredging of East and Gulf Coast ports to accommodate the larger vessels that can traverse the newer locks.

    The container shipping industry is building a massive amount of new tonnage that is specifically designed for this route: so-called Neopanamaxes. According to Alphaliner, 60% of mainline new buildings due for delivery in 2023-2025 are Neopanamaxes.

    In a cautionary tale, the Los Angeles Times reminded its readers that “In 2016 … rancorous labor disputes at the Port of Portland eventually resulted in both of the port’s container terminal operators leaving the port for good.”

    U.S. importers were already spooked by the expired L.A. dock worker contract, and now their concerns have been validated. Not only that, a robust infrastructure has sprung up in the last few years that makes it easier for shippers to connect their products with more reliable terminals and supply chains.

    Nerijus Poskus, vice president of ocean strategy at Flexport, told FreightWaves last month: “You have more shipping services to the East Coast than you’ve ever had before. You’ve built new supply chains. [Importers] can move back, but why would they?

    “People have gotten used to this new reality. I don’t think this has that much to do with the risk of a strike on the West Coast anymore. I don’t see the West Coast gaining all its share back,” said Poskus.

    As the West Coast becomes increasingly hostile to prosperity, its union shenanigans are going to accelerate the trend already underway of businesses fleeing to better locations. Their loss.


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