Effects of West Coast congestion force shippers to consider options

Unprecedented port congestion during the lengthy negotiations between West Cost shipping managers and union members certainly did its damage, but one group actually benefited from the slowdowns and backlog.

Though a contract between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) was ratified in May, the West Coast is still feeling the effects of the draining discussions, that is except for non-vessel owning common carriers (NVOCC). NVOCCs, as well as East Coast ports, have reaped the benefit of the slog West Coast ports have gone through over the course of the PMA-ILWU negotiations, according to the Journal of Commerce (JOC).

NVOCCs could reap long-term benefits from West Coast congestion
Importers and exporters needed a way to reroute their cargo to avoid getting caught in shipping quagmires along the West Coast, and that is where the NVOCCs came into play. The volume of U.S. import cargo controlled by NVOCCs rose 6 percent through the first five months of 2015 year-over-year, the news source noted. And the preference for NVOCCs in recent months may be more than a simple phase.

“It’s very understandable, given the mess in the California ports and on the West Coast, that customers would turn to NVOs to help them through all of those problems and all of those delays,” Richard Armstrong, chairman and CEO of Wisconsin-based logistics consultant Armstrong & Associates, told the JOC. “I suspect that some of that business will stay with the NVOs just because you don’t know when you’ll have another crisis. The NVOs are building those relationships, and I expect they will hold pretty well.”

Some shippers moving East, though with caution
At the same time, many shippers are moving their cargo away from the West Coast altogether, a separate JOC story noted. A survey conducted by the publication found that some shippers prefer the East Coast for now. Of all the poll respondents, 43 percent of those who previously had trans-Pacific contracts indicated that they would divert shipments to the opposite coast.

However, shippers who plan to move their cargo to the East Coast are cautious about how much they will end up permanently shifting. Of the respondents who said they were moving shipments East, half of them noted that less than 5 percent of that freight would remain there permanently.