West Coast Port Strike – PMA and ILWU Negotiations Update

The International Longshore and Warehouse Union and Pacific Maritime Association have been in negotiations since May 12, 2014 over a new West Coast Longshore labor contract. The current six year labor contract expired at midnight on June 30, 2014 and the ILWA and PMA are working actively to renew labor contracts by reaching an agreement on a new contract.

A deal has not yet been reached, and the previous contract has been extended. On July 7^th 2014 the parties agreed to take a 72-hour break from negotiations while the ILWU attending an unrelated negotiation taking place in the Pacific Northwest. During this break the parties have agreed to extend the previous six-year contract. The current contract has been extended briefly, until July 11 2014. Negotiations have once again re-started this week; however there has been no update at this time. To date, there has only been minor disruption at the port, but regardless shippers should begin to think about alternate options. Cargo will continue to move and operations will carry on at the port until an agreement can be reached, or the parties decide to strike. Both sides do understand the importance of the port to the local, regional, and U.S. economy.

While we are not diverting freight at this time, there are various alternate routing options to consider:

East Coast – Halifax or Montreal. While this is an option, Halifax only utilizes the Canadian National Railway which has limited capacity. Montreal uses both the CN and Canadian Pacific Railroad and is a better option for Inland Port Intermodal cargo. A surge in volumes could cause additional congestion at border crossings and /or customs exams.

West Coast – Vancouver or Prince Rupert. Prince Rupert is an option but is only serviced with the Canadian National Railway, so capacity can be expected to be limited. Vancouver is an option, but current congestion is already causing backlog.

US East Coast & Gulf gateway. This is an option for most carriers to move vessels through the Panama and Suez Canal. However, we would expect an increase in volumes to east coast ports, should cargo be diverted from the West Coast, to lead to delays with both unloading of vessels and back logs with the drayage companies in being able to pull containers before the free time expires.

Mexican gateway:  Ensenada, Manzanillo, or Lazaro Cardenas. These are all small ports which were only meant to handle small volumes, and would not represent the best option.

The above are available options; however should a strike occur we would expect to experience delays with any of these alternate routings. Supply chains can face a variety of disruptions, whether we experience port strikes or as we saw last winter, extreme weather. Not every disruption can be prevented or avoided, but the appropriate preparation can help to lower the impact on your supply chain.

Should you have any questions related specifically to your shipments, please contact the international department at PNG Worldwide info@pngworldwide.com