Last week I wrote about the Los Angeles-area container ports’ continuing problems between the shipping lines and port workers. My view is that inability to resolve these conflicts is the motivating factor behind the shippers’ support for alternate routes to the east coast of the US, like the expansion of the Panama Canal now under way. A corollary is that there’ll be a significant supply chain reshuffle for East Coast customers once the canal expansion is completed.
Shortly after that post, I found an article in the Journal of Commerce about the contraction of the container business in Portland, Oregon. It seems to me to anticipate what is likely to occur in the LA area in coming years.
According to the JOC, a jurisdictional dispute between the International Longshore and Warehouse Union (ILWU) and the International Brotherhood of Electrical Workers (IBEW) over who controls two electrician positions servicing refrigerated containers has resulted in continuing work stoppages and slowdowns in the Portland port over the past three years. The jobs were originally IBEW positions. In 2010, the ILWU demanded–and was given–control over the two slots. After ILWU members were unable to do the work satisfactorily, the port returned control to the IBEW. That triggered local work stoppages and slowdowns. In addition to this, the Portland local of the ILWU participated in the recent four-month work slowdown that affected all West Coast ports.
A month ago, Korean shipper Hanjin, which represented about 2/3 of the port’s container business, ceased operations at Portland. Last week, German shipper Hapag-Lloyd, which is virtually all of the rest, did so as well.
This leaves Portland with two problems:
–exporters to Asia of agricultural products from Oregon and Idaho, which had been using the return leg of trans-Pacific shipping routes to get their output to market no longer have that possibility. Their (more expensive) choices: truck goods to Tacoma, Seattle or LA.
–the ILWU contract calls for full-time workers to be paid $35.58/hour for 37.5 hours per week, whether there is work or not. If the recently negotiated contract is ratified, those figures will rise to $36.68 and 40 hours.
The Oregonian estimates that the loss of Hanjin will eliminate work for 657 longshoremen, being paid $225,000 a day–and put 5,000 more jobs in the community at risk. The earliest it sees possible replacement traffic is in two years. By then, however, the Panama Canal expansion should be complete–or very close.