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L.A. Port Truckers Strike, Cargo Could Divert to Canada

LOS ANGELES, CA — Port truck drivers from three of Los Angeles’ leading drayage firms began indefinite strikes on Monday morning over claims of unfair labor practices at the twin ports of Los Angeles and Long Beach.

The action is the fourth such strike in the past 11 months and is an escalation from prior ones that were just 24 to 48 hours long, all with the backing on the Teamsters Union.

But a larger strike may be looming over U.S. ports and it could affect the freight flows here in Canada. The current six-year labor contract between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) expired on June 30 at midnight. The two sides have been negotiating since May 12.

"While there will be no contract extension, cargo will keep moving and normal operations will continue at the ports until an agreement can be reached between the Pacific Maritime Association and the International Longshore & Warehouse Union," the two organizations said in a joint statement.

The National Association of Manufacturers and the National Retail Federation reported that a 10-day strike at West Coast ports could cost the U.S. economy about $2.1 billion a day and result in the loss of 169,000 jobs.

But what's more, North American and global trade would be significantly impacted by a prolonged strike or labor disruption.

The major West Coast ports of Los Angeles, Long Beach, Oakland, Portlant, Seattle, and Tacoma handled 11.2 million cargo containers in 2013, which represents 69 percent of the USA’s total retail containers.

If all American West Coast ports strike, cargo could divert to the East Coast, Mexican and Canadian ports. That could mean port congestion and increased truck traffic along the U.S.-Canada border.

Some strike woes:

  • Containers bypassing the West Coast altogether;
  • A possible railroad embargo to and from the West Coast ports to control the flow of rail cars, avoiding a backlog. Vancouver falls under the BCMEA, not ILWU, but intermodal cargo moving through the American West Coast can’t be rerouted through Vancouver;
  • Volume redirected to the East Coast and Gulf ports are advised to plan ahead and secure inventory in advance since those systems cannot accommodate all the extra traffic;
  • Ocean carriers are preparing for work stoppages at West Coast ports by posting a precautionary Port Congestion Surcharge (PCS). The surcharge applies to both reefer and dry shipments—$800 per TEU and $1000 per FEU. The surcharge will be applied to all shipments destined for or originating in the USA, including all shipments to and from Mexico and Canada.

What can be done to safeguard imports and exports?

While both the ILWU and PMA are confident a deal will get done, the rest of the supply chain could consider a back-up plan.

Here are some ideas:

  • Find alternatives. Work with an experienced logistics provider to develop a plan to ensure the flow of merchandise;
  • Ship the most predictable merchandise first. This will enable product to arrive at destinations in a timely manner before any labor dispute occurs;
  • Look into alternate port routings. See if there are any routing options at unaffected Canadian and East Coast ports;
  • Consider other modes of transporting goods. Look at sea-ground and air freight options to minimize cost increases;
  • Prepare in advance for delays and stoppages at ports;
  • Stay updated on the status of the negotiations.
 
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