Risk of rising congestion looms at San Pedro Bay ports

Transit times and productivity are back to normal at USWC ports, and with a new labour agreement finally in place between the PMA and ILWU, the ports are set for a normal peak season – all that’s missing are the volumes. But potential cargo diversion from strike-hit Canadian ports could bring back unwanted congestion.After over a year of negotiations, the Pacific Maritime Association (PMA) and International Longshore and Warehouse Union (ILWU) finally announced an agreement on a new six-year contract covering all 29 USWC ports. However, the Canada branch of the ILWU rejected a four-year wage deal and resumed strike action, raising fears of resurgent disruption to North American maritime supply chains.

Throughout the USWC negotiations, operational disruptions were minimal until June 2023. As a result, terminal productivity has normalised, with both Los Angeles and Long Beach reporting average 0.3 days terminal duration per 1,000 teu of throughput, well below pandemic peaks (see chart).

Average transit times on the eastbound Transpacific trade have also shown a notable improvement, averaging 14 days since March 2023, more than 70% below February 2022 peak, according to Drewry’s Ports and Terminals Insight.

Drewry’s latest trade forecasts suggest that WCNA volumes (i.e. including US, Canada and Mexico) will fall 8% in 2023. While the resolution of the USWC labour agreement and risk of draft restrictions in the Panama Canal favour a shift of cargo back towards the Californian gateways, this outlook may be downgraded in light of the Canadian port strikes which at the time of writing had caused 13 days of work stoppage in July with more to come.

Despite weaker trade, strike-prone congestion at Canadian pacific ports could result in cargo being re-routed south of the boarder, adding to congestion risk at California’s San Pedro Bay ports of Los Angeles and Long Beach. While Seattle remains the first diversion option for carriers, its longshoremen appear adamant that they will not handle Canadian destined cargo.

Diverted cargo will likely prove longer staying until intermodal operators can re-route it northwards, clogging up quaysides and raising dwell times. The recent spike in average vessel size at Long Beach, which according to Drewry’s Ports and Terminals Insight breached the 12,000 teu mark in April (see chart) could make the port complex particularly vulnerable to landside congestion. A prolonged Canadian ports stoppage could see congestion spread to vessel waiting time and slower steaming, lengthening carrier service transit times.
Source: Drewry

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