Export companies are re-routing shipments to east and Gulf coast ports in the US as a result of a protracted labour dispute between shipping companies and west coast port union workers. Up to $2bn in exports are estimated to have been lost per day with severe damage to business as 29 west coast ports partially shut in recent weeks.

The ports, including Los Angeles and Long Beach, the country’s busiest, are currently operating at 50% to 60% capacity and are backlogged with more than 30 unloaded cargo vessels and counting. This means delayed production lines, increased shipping and airfreight rates for international exporters, and massive losses for local exporters, who are losing hundreds of thousands of dollars a week.


US west coast ports handle about half the country’s maritime trade and roughly 70% of its imports from Asia. As a result of this slowdown, which has been intensifying since the labour dispute began nine months ago, east coast ports have picked up a larger volume of twenty-foot equivalent units (TEUs) – the technical term for shipping containers – coming from international exporters through the Panama Canal.

Kurt Strasmann, senior managing director at Port Logistics Group, told fDi: “This did not happen overnight. Shippers of containers are aware of this slowdown and have been since it began, and they are diverting to other ports for diversity and reliability.”

East coast ports have grown by 7.9% in terms of TEU counts over the past year, while western ports have grown by about 3.2%. In December alone, east coast ports gained 11.3% in TEU volume, while the west coast gained 4.9%. Without the slowdown, west coast growth would have been significantly larger.

In the long term, Mr Strasmann said, west coast ports will lose some business to a few of the east coast ports, particularly the ports of Miami, Savannah, Charleston and Houston. “You simply can’t run a business with this kind of volatility – the costs are too high to the business and the consumer. The businesses will find other locations.”

The slowdown is affecting numerous sectors, particularly agriculture, manufacturing and retail. Companies exporting perishable goods are facing painful losses, while many Asian manufacturers, such Japanese carmaker Honda, are being forced to delay their output in plants across the US because materials have not entered the country.

But while east coast ports have seen an increase in activity and TEU, the effect is more short-term than long-term, said Mr Strasmann. This is because the western seaboard has a built-in advantage – huge population demand in a strategic location, where 50% of imported goods stay in the area. And for exports coming from Asia, southern Californian ports are still the fastest and most efficient in the world, location-wise. This, despite political disputes, will not change.

“We will lose a percentage of customers to the east coast. That is inevitable,” noted Mr Strasmann. “In the short term, this will be very painful. We will see ripple effects throughout our regional and national economies. But in the long term, I think we will be fine.” 

The International Longshore and Warehouse Union, which represents dockworkers, and the Pacific Maritime Association, which works on behalf of the shipping companies operating within these ports, have been unable to agree a new labour contract.

Federal labour secretary Tom Perez has been sent by president Obama to break the gridlock, which some say could escalate to a full strike if not solved soon. West coast ports carried out a 10-day shutdown in 2002, which cost the US economy an estimated $1bn per day.