The head of the Georgia Ports Authority (GPA) said today that there needs to be an immediate resolution of the issues causing massive congestion at West Coast ports. Curtis J. Foltz, GPA's executive director, said the Port of Savannah is approaching critical mass from container traffic diverted by shippers and consignees concerned that ongoing labor turmoil will lead to a shutdown of West Coast ports.
Even though Savannah has been one of the prime beneficiaries of cargo diverted to East Coast ports, Foltz said the continued problems in the West are problematic for everyone because they throw an otherwise balanced supply chain out of whack. Foltz said the worsening congestion out West has been "incredibly disruptive" to all stakeholders. An immediate fix is necessary to restore fluidity to the U.S. ocean import-export network and ease the pressure on Savannah, whose volumes in the first half of its fiscal year have spiked well above historical norms, he said.
Through December, the midway point of GPA's 2015 fiscal year, container volumes, measured by twenty-foot equivalent units (TEU), were up about 13 percent year-over-year. In recent times, the year-over-year increase has been around 4 to 5 percent, Foltz said. He added that there's a good chance the higher volumes will hold through the rest of the fiscal year.
Foltz said it's impossible to quantify how much of the surge is from Asia-originating traffic that has been rerouted because of labor strife on the West Coast to go through the Suez Canal for calls at the East Coast. There are other factors that could play into Savannah's growth. It is considered to have one of the best logistics infrastructures of any U.S. port, a big attraction for large retailers. It also is considered the Southeast's go-to port for refrigerated exports; unlike most U.S. ports, Savannah has a fairly balanced import-export mix.
Savannah, the country's fourth-busiest container port—behind the Port of Los Angeles, Port of Long Beach, and the Port of New York and New Jersey—has so far been able to accommodate the increased traffic without a major strain on its capacity, Foltz said. However, its infrastructure will be pushed to the limit if diverted import volumes that would normally enter the West Coast don't recede soon, Foltz added. "We don't have much cushion left," he said.
Joe Harris, spokesman for the Port of Virginia, said earlier in the week that the ports under its jurisdiction have also seen a significant influx of diverted traffic, and that they, too, are reporting that capacity is growing scarce.
TALKS REMAIN SNARLED
Maritime stakeholders go into the President's Day weekend dogged by uncertainty over the status of contract talks between the International Longshore and Warehouse Union (ILWU), which represents about 20,000 unionized workers at 29 West Coast ports, and ship management represented by the Pacific Maritime Association (PMA). The two sides, which have been working without a contract since July 1, continue to negotiate under the guidance of a federal mediator.
Meanwhile, PMA suspended vessel loading and unloading operations yesterday and will do so again tomorrow through Monday. Vessel loading and unloading operations were also suspended on Feb. 7 and 8. PMA said management would not pay top dollar to dockworkers allegedly involved in a deliberate three-month work slowdown that has snarled port operations from Seattle to San Diego. ILWU said the backlogs are the result of employer mismanagement and the impact of larger ships carrying more goods, which has overwhelmed port infrastructures. The union also released what it said were aerial photographs of empty docks at the ports of Los Angeles and Long Beach in an effort to refute management's contentions that the facility is gridlocked.
ILWU has asked management not to shut down the ports by imposing a lockout, saying both sides are very close to a new contract. However, PMA said the union continues to make unreasonable demands such as the unilateral right to fire any arbitrator who rules against them in disputes at the end of each contract period.
West Coast port officials are resigned to the idea that some cargo diverted as a result of the labor problems are likely never to return. "There's no question that we are going to lose business, the question is how bad it is, and how fast we can recover from it," Jon Slangerup, head of the Port of Long Beach, said this week on a cable news program. Long Beach officials said they don't know how much is being diverted or precisely where it is going. As of this morning, there are 19 vessels at anchor at the twin southern California ports, according to Lee Peterson, a spokesman for the Port of Long Beach.
Foltz said that once a new contract is signed and West Coast port operations slowly return to normal, much of the diverted cargo will return. He added, however, that GPA would not be shy about trying to keep diverted business at Savannah or courting new customers who've grown tired of the status quo out West and might welcome a change.
"There have been new accounts that had not tried an East Coast solution" who were pleased with the experience at Savannah and other East Coast ports, Foltz said. These companies represent "new opportunities" for Savannah, he said.
"We're always open for business," he added.