The partial shutdown of 29 ports on the US west coast has come to an end after nine months of gridlock between the dockworkers’ union and shipping companies. The dispute is said to have potentially cost the US economy $2bn per day.
The protracted labour dispute, which saw west coast port activity cut by 50% to 60%, forced both domestic and international exporting companies to pursue costly alternative shipping methods and delay their production lines as more than 30 cargo ships were prevented from docking. Local agricultural exporters shipping perishable goods lost hundreds of thousands of dollars per day, and many international manufacturers brought their goods in via airfreight or rerouted them to east and Gulf coast ports.
McDonald’s in Japan flew in potatoes to prevent its French fry supplies from depleting; meanwhile, Japanese automaker Honda had to delay production in several of its US plants as the car parts waited in west coast bays.
The east and Gulf coast ports of Savannah, Charleston, Miami and Houston, among others, picked up an increased volume of twenty-foot equivalent units (TEUs) – the technical term for shipping containers – as international exporters rerouted goods through the Panama Canal. 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%.
Kurt Strasmann, senior managing director at Port Logistics Group, described the loss of commerce for west coast ports: “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.”
Despite this, Mr Strasmann described the loss as only short-term, citing the west coast’s “built-in advantage” of geographical location and massive population demand as too attractive for shipping companies to abandon permanently.
Port activity came back to life after US labour secretary Tom Perez, sent by the White House to mediate talks between the International Longshore and Warehouse Union and the Pacific Maritime Association, set a deadline of February 20 for an agreement to be reached. The details of the proposed five-year contract deal have not yet been released and the settlement remains tentative until approved by dockworkers from San Diego to Washington State.
West coast ports handle roughly 45% of the country’s maritime trade and 70% of imports from Asia. A similar labour dispute in 2002 led to a 10-day shutdown, resulting in the loss of $1bn a day.