(Bloomberg News circulated the following article by Rip Watson on September 29.)
LOS ANGELES — Shippers at ports in Los Angeles and Long Beach, which account for 40 percent of the ocean cargo delivered to the U.S., are training at least 3,000 workers to end delays that stem from rising shipments, mostly from Asia.
Ships are waiting about four days to dock and unload at the two ports because of congestion at the terminals, said James McKenna, executive director of the Pacific Maritime Association. The group that includes Maersk Sealand, the biggest ocean cargo hauler, said delays probably will continue for at least six weeks while the employees are trained.
Shipments through Los Angeles and Long Beach, the biggest U.S. ports, have climbed 10 percent this year from last year’s record pace, mostly on imports from Asia for retailers such as Wal-Mart Corp. and Target Corp. The ports account for 70 percent of all shipments into the U.S. West Coast from Asia.
“The U.S. cargo system has reached its maximum capacity,” said Jack Kyser, chief economist for the Los Angeles Economic Development Commission, in an interview. “There has been a steady growth in imports and there is no coherent expansion plan for transportation.”
Rail delays mostly at Union Pacific Corp., lack of communication between cargo lines and their dock workers’ union as well as incorrect economic forecasts of 2004 demand exacerbated the congestion, Kyser said. Truckers that are paying record fuel prices have shifted cargo to trains, adding to the congestion, he said.
“Wal-Mart and Target have increased the volume coming in this year and that wasn’t anticipated,” said Dave Arian, president of Local 13 of the International Longshore and Warehouse Union, representing Southern California dockworkers. Wal-Mart may ship 600,000 loads this year at the ports, he said.
Target, the No. 2 U.S. discount retailer, had “minimal” impact, spokeswoman Cathy Wright said. The company uses Los Angeles and terminals near Seattle. “The fact that we have two ports gives us flexibility,” she said.
Wal-Mart is pushing through its Christmas items, said Theresa Lopez, a spokeswoman for the Los Angeles port. “Businesses are shifting to get their items into the U.S. earlier. Wal-Mart wants to be done with that by mid-October, when normally they would go into mid-November.”
Southern California’s two ports had 18 ships idle in the harbor today waiting to unload. McKenna said delays may continue for as long as eight weeks while the ports train dock workers. Delays should ease in November when new employees will let the terminals operate day and night.
The two ports process 24,000 containers a day, McKenna said, with 40 percent of the cargo delivered in California and the remainder hauled by train and truck to cities such as Chicago and New York.
The Gap Inc., the biggest U.S. clothing retailer, said its merchandise is being delayed by as much as five days at the ports, though the congestion isn’t having a material effect on deliveries.
“Cargo has accelerated to the level that nobody expected,” Arian said. “We’ve reached the saturation point where there is no more space left. I don’t know if we are at a peak or if we will maintain this level. There has to be a new approach to how the work is done on the waterfront.”
Even the addition of as many as 5,000 workers to the current staff of 10,000 dockworkers may not be enough, McKenna said, since some companies are telling the shipping lines they expect the cargo flow will continue at the current pace for the rest of the year, instead of abating in late November as it has before.
Railroads
McKenna wants railroads to move cargo off the docks faster. Union Pacific, the biggest U.S. railroad, and Burlington Northern Santa Fe Corp., the second-biggest carrier, said they aren’t contributing to the delays.
“We think we are doing pretty well,” said John Bromley, a spokesman for Omaha, Nebraska-based Union Pacific. “We will take anything the steamship lines send to us. It’s the port side that’s congested.”
Richard Russack, a spokesman for Fort Worth, Texas-based Burlington Northern, said “we are in much better shape today than we have been in the last several months.” He declined to elaborate.