News / Port congestion public enemy number- one for US retailers as Xmas peak looms

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There is still no white smoke from the US west coast labour contract negotiations between the International Longshore and Warehouse Union (ILWU) and the employers represented by the Pacific Maritime Association (PMA), but since the 1 July expiry of the previous contract there has been a deterioration in port services, according to the National Retail Federation (NRF) which blames the prolonged period of limbo.

NRF vice-president of supply chain and customs policy Jonathan Gold said the organisation had learned of chassis maintenance and labour shortage cases resulting directly from the absence of a contract and the relevant arbitration procedures.

The trade association argued that without an agreement on the new master contract, the two parties should at least extend the original contract to the end of November – thus restoring confidence to retailers worried by the prospect of empty shelves during the Christmas shopping period.

A letter to the ILWU and PMA, signed by NRF president and chief executive Matt Shay, highlights the impact that port congestion in Los Angeles and Long Beach is having on retail supply chains.

“Retailers are now in the midst of their heaviest shipping season of the year preparing for the upcoming holidays, which are ‘make or break’ time for retailers and merchants. While we recognise that there are many reasons for the current port congestion, there is no doubt that the lack of a new labour contract between the PMA and the ILWU is having a big impact on port productivity, particularly in Southern California,” it says.

Other factors are also at work however, not least demand growth which saw US containerised imports increase by 5% year-on-year to 9.1m teu in the first half of the year.

Moreover, the containers have arrived at US ports on ever larger ships from Asia, challenging ‘big ship-ready’ ports to deliver on their promised ability to handle container exchanges that are often a 30% higher than a year ago.

Add to the mix the confused transformation from carrier-provided chassis to shipper-provided and an acute shortage of truck drivers, and it is not difficult to see why landside congestion has become public enemy number one for US retailers.

The White House sees port congestion as a threat to the recovery of the US economy and the Federal Maritime Commission (FMC) is in the midst of  a series of forums around the country to gauge stakeholders’ opinions and find common ground to ease the problem.

In a keynote address this week at the annual Port of New York/New Jersey industry day, FMC commissioner William Doyle called for a “collaborative effort” to work through the problems of port congestion.

He pointed the finger at ports and carriers still charging quay rent and container demurrage, despite shippers not being able to collect containers.

“I have heard numerous examples of shippers who are ready, willing and able to pick-up their containers but, through no fault of their own, are prevented from getting their boxes,” he said.

He urged ports and carriers “to think about this problem”, which he argued was  increasing.

There was no suggestion, however, that the FMC is planning to use any of its powers to resolve the issues.