• ITVI.USA
    13,795.070
    81.410
    0.6%
  • OTRI.USA
    26.560
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  • OTVI.USA
    13,740.380
    64.000
    0.5%
  • TLT.USA
    2.720
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  • TSTOPVRPM.ATLPHL
    2.670
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  • TSTOPVRPM.CHIATL
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  • TSTOPVRPM.DALLAX
    1.320
    -0.020
    -1.5%
  • TSTOPVRPM.LAXDAL
    3.040
    0.050
    1.7%
  • TSTOPVRPM.PHLCHI
    1.740
    0.050
    3%
  • TSTOPVRPM.LAXSEA
    3.210
    0.000
    0%
  • WAIT.USA
    108.000
    5.000
    4.9%
  • ITVI.USA
    13,795.070
    81.410
    0.6%
  • OTRI.USA
    26.560
    -0.120
    -0.4%
  • OTVI.USA
    13,740.380
    64.000
    0.5%
  • TLT.USA
    2.720
    -0.060
    -2.2%
  • TSTOPVRPM.ATLPHL
    2.670
    0.130
    5.1%
  • TSTOPVRPM.CHIATL
    2.930
    0.280
    10.6%
  • TSTOPVRPM.DALLAX
    1.320
    -0.020
    -1.5%
  • TSTOPVRPM.LAXDAL
    3.040
    0.050
    1.7%
  • TSTOPVRPM.PHLCHI
    1.740
    0.050
    3%
  • TSTOPVRPM.LAXSEA
    3.210
    0.000
    0%
  • WAIT.USA
    108.000
    5.000
    4.9%
American ShipperContainerNewsSupply Chains

ILWU: Don’t blame labor for ports’ market share drop

Employers, longshore workers urge California governor to take action to prevent loss of more cargo to other US gateways

California Gov. Gavin Newsom recently has received two written pleas to take action to prevent the state’s port industry from losing more market share. While the writers agree something must be done to stop the flow of business to ports on the East and Gulf coasts, they do not entirely agree on the causes of the loss. 

Fifty-two organizations led by the Pacific Merchant Shipping Association (PMSA) sent a letter to Newsom on July 13 that said, in part, that importers began taking their business elsewhere after a 2002 longshore labor shutdown. 

The International Longshore and Warehouse Union (ILWU) responded in a statement Thursday that a labor-management dispute from nearly 20 years ago should not be blamed for what it called California’s “competitive disadvantages.”

“West Coast ports are consistently strong and have always recovered market share after disruptions from natural disasters, brief labor-management disputes or economic downturns,” said Frank Ponce De Leon, an ILWU Coast Longshore Division committeeman. “Employer groups should not play American ports against one another in order to weaken environmental and labor standards.”

All parties agree West Coast ports indeed have lost market share. The PMSA letter cited analysis by economist Jock O’Connell that concluded the ports’ market share has declined 19.4% since 2006.

“According to the account often repeated in the maritime industry press, an obstreperous labor union has been singularly responsible for the loss of market share,” O’Connell wrote. “The saga is said to have begun in 2002, when a 10-day shutdown of USWC ports prompted beneficial cargo owners (BCOs) to reassess their reliance on trans-Pacific supply chains that traversed USWC ports.

“Importers in particular are said to have concluded that labor-management relations were more volatile on the USWC than at ports elsewhere in the country” and began moving containers through other North American gateways, he said. 

But in his letter dated July 7, ILWU President Willie Adams focused on the future rather than the past. He recommended “increased investment in cap-and-trade, transportation and other funds to strengthen the competitiveness of California ports,” as well as the continuation of a ban on subsidizing automation. He also said the California Air Resources Board should be directed to work with the ILWU in developing future port regulations. 

“The ILWU supports improving air quality on the waterfront because we live and work within port communities,” Adams wrote. “Reducing air pollution, however, does not require displacing workers through automation. In fact, automation significantly reduces efficiency while also dramatically increasing the costs to meet clean air targets.”

He said the ILWU has long advocated for reform of the federal harbor maintenance tax (HMT), which it said collects funds on cargo moving through West Coast ports and then disproportionately invests them in East and Gulf Coast ports. Because of this drain, Adams wrote, “we cannot expect that federal funds will pay for the improvements key to the success of California’s ports. This investment must come from the state.”

Port of Los Angeles Executive Director Gene Seroka also has criticized the way HMT funds are distributed.

“As we have seen through the Harbor Maintenance Trust Fund’s antiquated look at how investment takes place, we’ve been collecting the lion’s share of this tax and investing it in our competitors’ ports on the East and Gulf coasts as well as our river facilities,” Seroka said during a press conference Wednesday. “East and Gulf Coast ports have received 10 times the federal funding that has been received by West Coast ports over the last decade — $10 billion to $1 billion here on the West Coast. That has got to change if we are going to be more competitive.”

Seroka working to stem tide of market share loss

California governor urged to reverse ports’ receding market share

Port of Long Beach posts 11.1% container decline

Click for more FreightWaves/American Shipper articles by Kim Link-Wills.

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Kim Link-Wills, Senior Editor

Senior Editor Kim Link-Wills has written about everything from agriculture as a reporter for Illinois Agri-News to zoology as editor of the Georgia Tech Alumni Magazine. Her work has garnered awards from the Council for the Advancement and Support of Education, the Georgia Institute of Technology and the Magazine Association of the Southeast. Prior to serving as managing editor of American Shipper, Kim spent more than four years with XPO Logistics.

2 Comments

  1. In 2002, inbound container volume into the Top 10 U.S. ports was split 65.5% via West Coast and 34.5% via East Coast/Gulf Coast. By 2015, that had transitioned to 56.7% WC and 43.3% to EC/GC. Those coastal changes were driven by less cross country rail movements and more mostly water service to EC/GC population centers. The average annual change over the thirteen years to 2015, the last full year before the Panama Canal was expanded, was 68 basis points. With the expansion of the Panama Canal, a significant constraint in terms of relative size of a container ship originating in Asia that could serve the EC/GC compared to the WC was removed. This accelerated the coastal switching and in 2019 the split in inbound container volume into the Top 10 U.S. ports was 52.8% WC and 47.2% EC/GC. That works out to an average change of 98 basis points per year, a considerable statistical step-up from the previous rate of change.

    These changes are structural and primarily relate to the population dispersion in the continental U.S. Currently, some three-quarters of Americans live in states that are more readily accessible (ie, less distance) via EC/GC ports. As linehaul costs per mile via container ship are geometrically less than by either doublestack or truck, the most cost-efficient will almost always involve getting to a major port closest to the final destination. That is largely an algebraic function. Based on our current population dispersion, I anticipate this coastal switching to continue for some time and inbound containers largely go to where people live. Population dynamics are also assisting with the states bordering the GC (excluding Florida) collectively going from 11.6% to 12.6% of population over the last twenty years and Florida alone going from 8.7% to 9.9%. These structural changes have benefited EC/GC ports, particularly those with a favorable location and the ability to expand their own infrastructure and accommodate distribution centers. For instance, few ports are as well-positioned going forward to take advantage of these structural changes as my hometown city of Mobile.

    The short answer is that no matter who petitions the California governor, there really isn’t much he can do about these structural changes. The PMSA pointing to the ILWU is a canard and the economic forces related to the most cost efficient underlying way to move containers are and will continue to drive change here. California has benefited from a disproportionately high share of inbound loads for decades, and still has some of that benefit, but it will continue to unwind based on overall cost economics. That it existed for so long probably has much to do with historical carrier pricing practices that have rarely reflected the cost and service differences between alternative routings.

    Malcom McLean appropriately railed at the silliness of the conferences setting the same rate in the mid-1980’s for an Asia to NY container shipment that was off-loaded on WC and went cross country via doublestack compared to one moving all-water via the Panama Canal. The former was a premium service with a shorter, more predictable transit time involving much more underlying costs that he believed should be reflected in the respective rates. Given a choice of not paying more for a quicker premium service, its not surprising that many shippers elected not to move loads on Malcom’s slower but much more cost efficient and pioneering Econship service.

  2. It is absolutely the fault of the ILWU. They run the ports without fear of losing their jobs which makes a portion (of course not all, there are some great workers out there), of them entitled and callous. There have been problems with their service and attitudes for decades now but let’s just go over the current issues. Under the assertion that in order to make the container pickup process smoother and less congested, the terminals decided to implement a universal appointment system. However, they give too many appointments out for certain time slots or they don’t supply enough staff to service the drivers who have the appointments to allow for the lines to move quickly. Case in point, 2 weeks ago a driver had a 9 pm appointment and arrived to the line at 7:30 pm. It took him 3 hours to get to the front of the line and they told him he missed his appointment. Dispatch emailed over and over and over and they basically said sorry, can’t help you. All they had to do is say, we understand, we are short staffed and the line moved really slow, here, go ahead, have your driver proceed. But no. There is no consideration or compassion for the drivers who’s lives had been made miserable with all the changes. 4 free days? More like take this one appointment or you’re not going to get another one within the free time. And if you try to complain about it, hey, why didn’t you take the appointment that was available? That’s on you.

    The driver in the case above went to the trouble window but was denied along with his dispatcher who was repeatedly emailing the supervisor. There were about 20 people outside the trouble window all with the same issue. They knew what was going on, they just didn’t care. Finally after the driver was turned out and went home, the supervisor emails back hours later and says, ok fine, I’ll give him a pass, have him go back. Go back? Back into the 3 hour line? Thanks, too late. He’s already home now. Shortly after this, the trucker decided to hang up his wheels and quit the business. It was the last straw. Between the demand for dual transactions (the requirement that you HAVE to be picking up a fresh container in order to RETURN an empty one), and the overall lack of available appointments both for pickup and empty return has just made it too difficult for many truckers to continue on. The terminals have zero sympathy and the people who have to pay are the importers in the end. Demurrage? Too bad, pay up. Your trucker should have picked up within the free time. Chassis Fees? Not our problem. No appointments to return the empty? Keep checking. Too bad. Can’t help you. Sorry, good bye. Those are what we hear all too frequently when dealing with these people. Complain to the manager? LOL, yeah right, they’re the ones training the clerks how to respond this way. And guess who often has to lose money because the importers don’t understand why they have to pay 6 days of chassis fees or per diem because there were no empty container return appointments? The trucker has to eat it. Or lose the client. It’s no wonder so many importers don’t want to deal with the Port of Los Angeles/Long Beach. They run it like a mafia.

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