Situation at Ports Affects Wider Economy

Pasadena Star News
By: Cynthia Kurtz
Published: 1/28/2015

The Ports of Los Angeles and Long Beach are critical to San Gabriel Valley commerce.
Over 6.7 percent of SGV jobs are related to international trade compared to 5.3 percent in Los Angeles County.

Close proximity to the ports is one of the top five reasons businesses locate in the region. So when there is a disruption in port activities, it isn’t long before the impacts are felt here.
A year ago, container ships moved quickly into and out of the Ports of Long Beach and Los Angeles. Containers were unloaded to waiting trucks and trains for distribution to their destinations across the nation. Containers filled with products from overseas were loaded and refilled with products and bulk goods from the United States with ships soon on their way.

What a difference a year makes. Today as many as 15 ships at a time are anchored waiting for a place to dock. Truck drivers trying to pick up or drop off containers wait for hours. Some leave without transferring their cargo only to return the next day and wait again.

And the congestion at the nation’s busiest ports continues to get worse. At least in part the congestion is due to the contentious contract negotiations between the Pacific Maritime Association (PMA) and the International Brotherhood of Longshore and Warehouse Union (ILWA). ILWA represents 20,000 dockworkers along the west coast including the Ports of Long Beach and Los Angeles. Workers have been without a contract since July.

Staffing decisions, mega-ships carrying almost twice the cargo of standard ships, and a recovering economy also play a role in causing the congestion. But regardless of the causes, the resolution of the problem will require management and labor working together. It is unlikely that can occur amid the current mudslinging and angst of tough negotiations.

After seven months of talks, both sides are frustrated and have requested federal intervention. This month a federal mediator began meeting with PMA and ILWA. That is great news. According to the Federal Mediation and Conciliation Service, the government agency that handles labor arbitrations and mediations, 85 percent of mediated negotiations end with an agreement.

In the meantime, the economic damage is mounting. Overseas competitors are quick to jump on the opportunity to discourage purchasing American products. With the opening of the Panama Canal expansion only a year away, East Coast ports are eager to divert cargo and showcase themselves as reliable alternatives.

Closer to home business must find ways to adjust to the delays while continuing operations. Philips Lighting in Baldwin Park has been experiencing shipment delays of lighting components of three to five weeks since August. In order to continue production, components have to be shipped by air dramatically increasing costs.

A SGV recycling company that exports over 125 containers of recycled materials every day started having problems in November. They had to add 300,000 sq. ft. of warehouse space to house materials that had been sold but could not leave the port. The additional cost for storage and handling is $1.8 million and growing.

Huy Fong Foods in Irwindale is also struggling with additional costs. When trucks comeback empty or receiving dates change there are additional costs. Retailers and manufacturers companies throughout the SGV are impacted.

The recovery is still too fragile to withstand any interruption. Let’s get this contact settled so we can get the ports back operating like clockwork.