Less than a week remains until the current contract between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) expires. Earlier this month a coalition of trade groups representing manufacturers, retailers and transportation providers urged both sides to wrap up negotiations over a new West Coast longshore labor contract before it expires at midnight on June 30. PMA President Jim McKenna throughout the spring said an agreement would be reached by mid-July.
Even with assurances, the prospect of yet another disruption of West Coast port activity has shippers looking for alternatives, including routing some cargoes through East, Gulf or Canadian ports. No matter the precautions, huge numbers of containers would be affected in the event of a strike or lockout. West Coast ports handle more than two-thirds of U.S. retail container cargoes, including the vast majority of goods imported from Asia, with total volumes of around 20 million 20-foot equivalent units (TEUs) a year. The costs of a potential closure are already being felt, with carriers announcing a precautionary congestion surcharge of $800 per 20-foot container and $1,000 per 40-footer. In the event of a complete stoppage, estimates on the impact on the economy are anywhere from 1 to 2 billion per day according to trade analysts (link to JOC article below).
In reaction to the dragged out negotiations, U.S. Customs has published interim procedures in the case of work stoppage. These will be published on its Unified Business Resumption site when these interim procedures go into effect, and when the interim procedures are terminated and normal processing resumes. Impacted West Coast ports will designate a point of contact for trade inquiries about specific procedures for each port, which will also be posted. Customs will also transmit new information through the Cargo System Messaging Service, which is an email subscription service that provides notification of new messages.
On the white paper provided below, Customs has outlined and released some of the following procedures for filers: when cargo is discharged in a foreign port, transshipped at a foreign port for delivery at the original destination port (e.g., via barge), diverted elsewhere on the U.S. West Coast, diverted to an East or Gulf Coast port, or held in a ship at anchor until it can be discharged at the original destination port. Stay tuned for details from Customs and on the PMA-ILWU negotiations as they are released.
Click here for a link to the CBP whitepaper with detailed information on the interim procedures.
Click here for a JOC article detailing the economic costs of these potential disruptions.
Click here for a JOC guide to the PMA-ILWU labor negotiations.