LA Port, CMA CGM Say East Coast Strike Unlikely to Pose West Coast Port Disruptions
Top execs at the Port of Los Angeles and container shipping giant CMA CGM want to dispel the idea that an East and Gulf Coast port strike would result in major disruptions on the West Coast if freight was diverted in its direction after Oct. 1.
There are concerns that workers on the West Coast ports will briefly walk off the job in solidarity with the International Longshoremen’s Association (ILA) if they strike, or opt not to work on ships if they are diverted away from the East and Gulf Coast.
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“I don’t have any evidence right now of cargo ships taking a left-hand turn that normally go to an East or Gulf Coast port and coming here to the west or specifically Los Angeles,” said Port of Los Angeles executive director Gene Seroka at a media briefing Wednesday. “There has been a decades long tradition between labor organizations that one will not take advantage of another’s collective bargaining process. This hasn’t happened since the 70’s. I don’t see it happening again.”
When asked about contingency plans in the event of a strike, George Goldman, the North America president of CMA CGM, backed up Seroka’s assertion.
“As Gene alluded to, there are zero ships that I’m aware of that will be diverted to the West Coast as of right now,” Goldman said. “Within our global network, we have existing ships that are somewhere else that are currently going to the West Coast. Cargo may flow from an origin point there, but not diverted.”
Goldman was blunt about the impacts of a potential port strike.
“One day is too long,” Goldman said. “The moment you close the door, things begin to back up.”
As the contract expiration nears, cargo certainly has been flowing into the West Coast ports at a frenetic pace.
The Port of Los Angeles processed 960,597 20-foot equivalent units (TEUs) in August, up 16 percent from the prior year as more cargo continues to flow into West Coast ports. The TEUs signal the San Pedro Bay port’s busiest non-pandemic month ever.
Loaded imports helped prop up the container total at 509,363 TEUs, an 18 percent increase compared to the previous year.
Loaded exports came in at 121,744 TEUs, a slight drop of 3 percent compared to year-ago month. The port has plenty of empty containers because of the deluge of freight entering its gateways, having processed 329,491 empty containers, a 22 percent jump compared to 2023.
In the event of a strike, the port can handle the excess cargo, said Seroka, who noted that the port is currently running at about 80 percent capacity of 1.2 million TEUs.
Overall, the port has moved 6,631,688 TEUs the first eight months of 2024, a 17 percent increase over the 2023 mark.
The L.A. port’s sister hub, the Port of Long Beach, had an even bigger flurry of goods entering its terminals at 913,873 TEUs, topping August 2023 totals by 34 percent. Imports carried that number as well, with a 40 percent escalation to 456,868 TEUs.
Seroka said he expects September to also drive more than 900,000 TEUs.
“After that, it’s possible that some of the early front-loading of cargo over the past several months could impact Q4 volume,” Seroka said.
Aside from the labor concerns, Goldman said the ocean freight company is bullish on the fourth quarter, based on the recent retail sales numbers and Thursday’s news of mortgage rates falling to a two-year low and a 50 percent basis-point cut in interest rates.
Carriers hit shippers with fees for East Coast shipments
As concerns about an impending work stoppage haunt the industry, ocean carriers are starting to slap shippers with new charges to recoup the potential losses of not being able to dock at an East or Gulf Coast port.
At the beginning of September, Mediterranean Shipping Company (MSC) told customers it would apply an emergency operations surcharge of $1,000 per TEU and $1,500 per 40-foot container starting on the Oct. 1 strike date. This would be tacked on all shipments from Europe to the East and Gulf Coasts, as well as to ports in the Caribbean, Mexico and Canada.
CMA CGM will potentially charge even more per TEU, with the French carrier pricing $1,500 per 20-foot container for import shipments into the ports impacted by a strike. Export shipments would be subject to local port charges of $800 per TEU and $1,000 per 40-foot container. It is possible those charges don’t actually go into effect, because they will be applied on Oct. 11.
The delayed date is likely a byproduct of U.S. federal maritime regulations, which require carriers to notify shippers of new price hikes and surcharges at least 30 days before they go into effect.
On Wednesday, Hapag-Lloyd debuted a new work disruption surcharge of its own, which will apply for imports to the East and Gulf Coast from all ports in North Europe, the Mediterranean, Africa, the Middle East, the Indian Subcontinent, Oceania and Latin America. Like MSC, the charge is $1,000 per TEU. The fee will go into effect Oct. 18.
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