Major Supply Chain Disruptions in the U.S.A. Ocean Freight Market

LOS ANGELES/LONG BEACH: A total of 19 container ships were recently anchored at the congested ports of Los Angeles and Long Beach marking an undesirable record number.

The number of anchored container ships has been in double digits every day but one since mid-January. Overall, 22 ships were anchored if you are to include the two bulk carriers and the general cargo ship present. Among the 19 anchored container ships were vessels operated by MSC, CMA CGM, COSCO, Hanjin and CSCL.

OAKLAND: The situation in Oakland continues to deteriorate at a rapid level and the inability for vessels to berth is creating a significant backlog. It has been reported that rail networks between Oakland and LA/LB have hit max capacity. As a result of increased cargo dwell times and limited chassis availability, rail carriers are not accepting additional freight in this lane.

SEATTLE: Departures for intermodal freight still average about 10 days delayed. Demand for trucking continues to exceed available capacity with delays of 7-10 days to obtain power due to low productivity at the terminals.

NEW YORK/NEW JERSEY: All Marine Terminals in the Port of New York and New Jersey will have a delayed opening. In order to facilitate snow removal and salting operations, there will be no truck queuing permitted until after 9:30 AM. As a reminder, in order to keep traffic flowing on the roadways and for the safety of everyone, there will be no queuing on the public roadways.

PMA and ILWU contract negotiations update

PMA CEO James McKenna, released details of the employers’ contract offer to U.S. West Coast longshoremen as their hopped to be their final offer in the negotiations. The hopes faded when ILWU negotiators returned to the bargaining table with a new list of demands.

The surprising PMA offer includes:

• Full-time ILWU workers already earn an average of $147,000 per year, and would see their wages rise roughly 3% per year, along with fully paid health care that costs employers $35,000 per worker per year.
• The maximum ILWU pension would rise to $88,800 per year as part of the proposed five-year contract.
• Maintenance of Cadillac health benefits, no worker premiums, no co-pays and no deductibles for in-network benefits
• Jurisdiction over maintenance and repair of truck chassis

McKenna said no one wants a lockout, but with ports at the point of gridlock and most vessels in the trans-Pacific trades stuck on the West Coast, the system will shut itself down. No one can predict when that will happen, five days, seven days, two weeks, but the ports will grind to a halt, he said.

If employers do call a lockout, it would set in motion a process that could lead to President Obama invoking an 80-day cooling off period under Taft-Hartley but that is not a cure for poor productivity and gridlock.

There are six “open” contract issues that must be resolved, including details of the employers’ offers on wages and pensions that the ILWU must sign off on. One of the issues that employers find troubling is a new demand by the ILWU that arbitrators can be unilaterally fired by either the ILWU or the PMA while the process right now is, parties must both agree to remove a local arbitrator at the various ports.

ILWU President Robert McEllrath responded that there should be no need for an employer lockout or a dockworker strike because an agreement is “extremely close.” The union “dropped almost all of our remaining issues to help get this settled, and the few issues that remain can be easily resolved.” He said the ILWU pledged to keep the ports open and to keep cargo flowing.

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Best regards

Tomislav Malezija

SCHENKER & CO AG

Regional Head Office South East Europe

Route Development Manager USA & NME