Fitch: West Coast Labor Delay Sending Cargo North

Posted by Michelle howard
Tuesday, August 12, 2014

The ongoing risk of a strike or work slowdown at West Coast ports may already be diverting cargo to other distribution methods and setting the stage for broader economic impacts, Fitch Ratings says.

 

The International Longshore and Warehouse Union (ILWU) workers are currently working without a contract and could strike at any time. However, Fitch notes that recent negotiations between the ILWU and the Pacific Maritime Association (PMA) are said to be amicable, and cargo has been moving through West Coast ports without incident since the expiration of the previous contract on June 30.
 

While a long-term strike is not likely, we believe some shippers may be diverting their cargo to avoid potential problems. On Friday, DP World Vancouver, one terminal at the Vancouver port seeing diversions of West Coast cargo, stopped receiving U.S.-bound containers destined for rail transfers at its Centerm terminal, reporting a shortage of rail cars. Afterwards, TSI Terminal Systems, operator of Vancouver's Deltaport and Vanterm terminals and Port Metro Vancouver's largest container terminal operator, announced it will continue to handle U.S.-bound rail cargo, honoring already established allocations of railcars to shipping lines by CN Railway (based on past U.S.-bound volumes for each shipper).
 

If this shift were to persist from weeks into months, some shippers may continue to use alternative ports even after the ILWU contract is finalized and the risk of a strike or slowdown has passed. The impact of such diversion could be exacerbated by the annual peak in shipping, which precedes the holidays. We believe many shippers are likely speeding up their current shipments to build inventories and planning diversions to ports in British Columbia, such as Prince Rupert and Vancouver. These ports handle approximately 20 million 20-foot equivalent units (TEUs) of cargo per year and their potential impact on the U.S. economy could be in the billions. Any potential labor action is expected to be relatively short, as the size of the impact is likely to motivate President Obama to invoke the emergency provisions of the Taft-Hartley Act.
 

A short strike or labor slowdown would not affect the ports' credits. Short-term shipments may decline and would likely be mitigated through their strong contracts with terminal operators and substantial liquidity reserves. According to Fitch's recently released peer review of U.S. Ports, the largest rated West Coast ports (Los Angeles and Long Beach) have over 600 days cash on hand and minimum annual guarantees accounting for over 70% of operating revenues.

Maritime Reporter October 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Contracts

Aussie Tug Engineers take Deal, Cancel Strike

Tug engineers withdrew plans to strike at Port Hedland, Australia's biggest iron ore port, tug operator Teekay Shipping said on Thursday, removing a threat to exports

MoA for APM Terminals in Ghana Port Deal

Port operator APM Terminals, a unit of shipping and oil conglomerate A.P. Moller-Maersk , said on Thursday it had signed a memorandum of understanding with the

Lynden to Provide Barge Service for Tulsequah Mine Project

Lynden Logistics, LLC signed a letter of intent with Chieftain Metals Corp. to provide barge services in support of the construction and production of the Tulsequah Mine in British Columbia.

Ports

Pair of ASD Tugboats Delivered to Keppel-Smit

The ASD tugs KST Passion and KST Pride were were delivered to their owner, Keppel-Smit Towage Pte. Ltd of Singapore in October 2014. The two vessels are the first

US Sets Import Duties on Containers from China

The U.S. Commerce Department on Thursday set duties on imports of rail and road transport containers from China after finding the goods were sold below cost in the United States.

Panama Canal Delegates Meet with Japanese Customers

A Panama Canal delegation headed by Administrator Jorge L. Quijano visited Japan to hold discussions with the Japan Shipowners’ Association (JSA) and the major Japanese shipping lines,

Finance

Maersk to Introduce Low Sulphur Surcharge

To offset the additional cost incurred by switching to cleaner fuels in Emission Control Areas, as required by the new regulation, Maersk Line will introduce a new Low Sulphur Surcharge (LSS).

OW Bunker Bankruptcy has ‘Limited Impact’ on Monjasa

Though OW Bunker’s collapse has varyingly affected many companies around the globe, Danish bunker fuel provider Monjasa A/S said in a statement that the news holds

Sustainability Report: Carnival Ahead of Emissions Goal

Carnival Corporation & plc released a report today detailing its sustainability efforts, including initiatives which enabled the company to meet its corporate goal

Container Ships

Maersk to Introduce Low Sulphur Surcharge

To offset the additional cost incurred by switching to cleaner fuels in Emission Control Areas, as required by the new regulation, Maersk Line will introduce a new Low Sulphur Surcharge (LSS).

US Sets Import Duties on Containers from China

The U.S. Commerce Department on Thursday set duties on imports of rail and road transport containers from China after finding the goods were sold below cost in the United States.

Panama Canal Delegates Meet with Japanese Customers

A Panama Canal delegation headed by Administrator Jorge L. Quijano visited Japan to hold discussions with the Japan Shipowners’ Association (JSA) and the major Japanese shipping lines,

News

MacGregor's Hatlapa Brand is 95 Today

November 2014 marks the 95th anniversary of MacGregor's Hatlapa brand. Since its foundation in 1919 by German engineer Max Hatlapa, the formerly independent Uetersen-based

Maersk to Introduce Low Sulphur Surcharge

To offset the additional cost incurred by switching to cleaner fuels in Emission Control Areas, as required by the new regulation, Maersk Line will introduce a new Low Sulphur Surcharge (LSS).

Rowan's Fleet Status Update

Rowan Companies plc informed today that its monthly report of drilling rig status and contract details have been updated as of November 20, 2014.  Notable events

Government Update

Ice to Close Upper Mississippi from Nov. 20

The shipping season on the upper Mississippi River will end on Thursday as ice surrounding locks and dams near Minnesota's Twin Cities forced the earliest winter

Aussie Tug Engineers take Deal, Cancel Strike

Tug engineers withdrew plans to strike at Port Hedland, Australia's biggest iron ore port, tug operator Teekay Shipping said on Thursday, removing a threat to exports

Mombasa's 2014 Port Cargo to Soar 14 pct

East Africa's biggest port, Mombasa, expects to handle at least 14 percent more cargo this year, helped by its expanded capacity and a marketing drive, its management said on Thursday.

Logistics

US Sets Import Duties on Containers from China

The U.S. Commerce Department on Thursday set duties on imports of rail and road transport containers from China after finding the goods were sold below cost in the United States.

Panama Canal Delegates Meet with Japanese Customers

A Panama Canal delegation headed by Administrator Jorge L. Quijano visited Japan to hold discussions with the Japan Shipowners’ Association (JSA) and the major Japanese shipping lines,

G6 Alliance Makes Seasonal Service Change

Pacific Atlantic 2 service has temporarily stopped calling European ports due to a seasonal change in market demand. The service portfolio between Asia and North

 
 
Maritime Contracts Maritime Security Maritime Standards Offshore Oil Pipelines Port Authority Ship Electronics Ship Simulators Shipbuilding / Vessel Construction Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1314 sec (8 req/sec)