Editor’s Note: This is a blog by one of our affiliate partners, Global Vision Group, a Federal Maritime Commission licensed Non Vessel Operating Common Carrier (NVOCC) and Ocean Freight Forwarder (OFF).
The Pacific Maritime Association (PMA) and the International Longshoremen Warehouse Union (ILWU) have been operating without a contract since the end of June, 2014. Initially, shippers were encouraged when both sides declared that the ports would keep operating as they continued contract negotiations.
As negotiations wore on though, the situation deteriorated, and the PMA accused the ILWU of engaging in a slowdown that negatively affected the ports. Now, after eight months of increasingly bitter contract negotiations and lobbying by Congressional representatives, President Obama has ordered his Secretary of Labor, Tom Perez, to jump-start stalled labor talks between shipping companies and the dockworkers’ union.
Even if there is an agreement in the near future, it will be several months before the ports on the West Coast resume normal operations. And for the C-Level Executives who are pressuring their supply chain team to “do something,” it may be time for a reality check.
So In this Extreme Case, What are Supply Chain & Logistics Managers to Do?
Most supply chains are by nature, robust entities that can weather almost any challenge. But occasionally an outside force so intense occurs that can cause part of your supply chain to weaken and put at risk your bottom line. If your firm is currently importing cargo from Asia, you know about the challenges faced by what is rapidly becoming a crisis on the West Coast. This problem has been exacerbated by many factors:
All modes of the logistics industry are seeing a shortage of drivers. The new Hours of Service regulations have limited the number of consistent hours a driver may be behind the wheel. This plus fewer and fewer drivers entering the workforce (driving a truck just is not seen as an attractive vocation for younger workers), has severely strained the available pool of drivers.
All containers move on a chassis frame. At one point, the steamship lines owned the chassis and oversaw their distribution at the ports and inland container yards. This changed in 2010, when the steamship lines, starting with Maersk, decided to divest itself of ownership of chassis and no longer provide equipment to trucking companies. Other Lines followed suit. This, coupled with the Federal Motor Carrier Safety Administration’s “Roadability Rules” (Requiring providers of intermodal equipment to provide greater diligence of maintenance of that equipment at a cost that was also greater), has led to a scarcity of chassis equipment. Chassis are no longer positioned and repositioned to where they are needed most, and there are fewer of them to begin with due to higher attrition caused by the increased regulations. This chassis shortage has led to longer times needed to pull a container from ports all over the country.
West Coast Dockworkers Strike/Slowdown
An expired contract between dock workers and shipping companies has caused an unprecedented slowdown at the Los Angeles and Long Beach ports where the United States receives about 40% of all imported goods. Workers sympathetic to the California dock workers, as well as diverted freight have slowed down operations at other ports up and down the west coast. Negotiations threaten to stretch well into 2015, but the ramifications of this could be felt much longer. Importers and companies all across the country are scrambling for alternatives as container ships ride at anchor off the southern California coast, awaiting unloading.
These three issues have resulted in equipment shortages, delays in getting containers unloaded and pulled from ports and delivered to customers. What once was a routine schedule of the delivery of goods, has had to be pushed back and re-examined, causing issues for both distributors and end users, and making many that depended on “Just in Time” deliveries to completely reassess the way they do business. To hamper matters even further, ripples from the situation have spread to the East Coast, as shippers switch to already busy East Coast ports in an attempt to circumvent the delays in California.
So What Is An Importer To Do? What Is The Best Course Of Action To Deal With These Problems?
The best thing an importer can do is to choose the right 3PL partner.
- A 3PL that understands the current business situation and is prepared to get out in front of it, not react to events as they happen.
- A 3PL that can offer you viable options and solutions, not one that is locked into the same old process that they have used for years. This is a time for original thinking. Is Full container freight not moving? Try moving your most important freight LCL to the East Coast. Or look at air freight options.
- A 3PL partner that will always present the facts to you, no matter how disconcerting they may be. Has your freight been diverted to Korea for two weeks? You needed to know about it two weeks ago, not when you are expecting the vessel to dock in a few days. A Partner that will be forthright with information and then be ready to present you with those options I mentioned moments ago.
Where do you find a partner like that? Someone that will treat you and your business with respect, dignity and integrity? If you’re reading this blog, I’d say you already have. Global Vision Group is a logistics provider that will insure that none of the links of your supply chain is weak. Contact me so we can discuss how to bring over 100 years of success to work for you.