By Andrew Khouri, December 25, 2014
The number of ships at anchor off the coast has declined, but the docks
at the Long Beach and L.A. ports still overflow with cargo.
Brutal congestion at the nation's busiest ports in Los Angeles and
Long Beach is throwing a kink into an economy that's
into high gear.
The months-long bottleneck is hurting retailers and other businesses
that aren't getting their shipments on time as massive ships from Asia
anchor off the Los Angeles coastline waiting for the docks to clear.
been the bane of my existence," said Lisa Foster, whose Venice business
sells reusable shopping bags imported from China. "And it's only
getting worse and worse and worse."
That's in stark contrast to a national economy that's on pace to add the
most new jobs since 1999. On Tuesday, the Dow Jones industrial average
crossed the 18,000 threshold for the first time, after a government
report showed the economy last quarter grew at the fastest pace in more
than a decade.
Growth, however, would have been stronger if the ports — which handle
roughly 40% of U.S. imports — were operating smoothly, said
international trade economist Jock O'Connell. The negative drag probably
will worsen in the fourth quarter, when the most brutal congestion
surfaced, he said.
"This does act as a drag on the economy,"
O'Connell said. "You want the ports, the entire supply chain to operate
at maximum efficiency. And it's not."
L.A. and Long Beach are trying to speed up the flow of cargo. The
ports are taking a variety of steps to ease the logistical nightmare
they blame on the increased use of massive container ships, a surge in
cargo as the economy improves and a shortage of the trailers that
truckers use to haul goods from the ports. In February, a shared trailer
system will roll out, designed to make the equipment more available for
And this week, the Long Beach Board of Harbor
Commissioners voted to ask the federal government for permission to work
with its competitor in L.A. in a bid to clear the docks.
"These are systemic problems that can only be solved by bringing all
the parties together," Port of Long Beach Chief Executive Jon Slangerup
said in a statement.
to terminal operators and shipping lines, dockworkers are also slowing
down on the job to gain leverage during contract negotiations, further
hindering the nation's busiest port complex.
The congestion is
wreaking havoc on supply chains across the country. Many retailers
airlifted their goods or diverted them to the East and Gulf coasts to
ensure presents arrived for the holidays.
Businesses are likely to
eat the added costs, which will affect bottom lines in the fourth
quarter, said Jonathan Gold, vice president of supply chain and customs
policy at the National Retail Federation.
Yoga clothing firm Lululemon Athletica Inc. lowered its 2014 revenue
guidance earlier this month, in part because of West Coast port
congestion. FedEx Corp. Chief Executive Frederick Smith told analysts
that some consumers are finding goods out of stock when they order
"The slowdown in the West Coast ports has been a much
bigger deal than people think," he said. "I suspect that you'll see a
lot of purchases of gift cards in lieu of merchandise."
The logjam has been a nightmare for small firms as well.
Foster, owner of 1 Bag at a Time in Venice, said she can't promise
potential customers speedy delivery of her company's reusable shopping
bags from China. In response, would-be clients went elsewhere and sales
were lost, she said.
"Uncertainty kills a lot of my business," she said.
situation has improved slightly since Thanksgiving, said Port of Long
Beach spokesman Art Wong. The number of ships at anchor off the coast
has declined, but the docks still overflow with cargo. And a likely
cargo surge before the February Chinese New Year — when factories
traditionally close — threatens to reverse any improvement.
to the Pacific Maritime Assn., which represents employers operating
shipping lines and terminal operators, the union is directly thwarting
traffic flows by refusing to dispatch skilled workers for nearly two
months at L.A. and Long Beach. Slowdown tactics have also been deployed
in Oakland, Seattle and Tacoma, Wash., according to the employers.
Nearly 20,000 dockworkers at 29 West Coast ports have been working
without a contract since July, when their six-year agreement expired.
union says the congestion stems from other factors, including the
shortage of trailers. Before the slowdown accusations surfaced, L.A. and
Long Beach were already experiencing the worst congestion in a decade.
Monday, employers called for federal mediation to help reach a new
agreement, saying the two sides remain far apart on many issues. The
union has not yet responded.
In the meantime, businesses such as electric bike shop Pedego Irvine say they don't know what to do.
Owner Bob Bibee said the Chinese parts needed to assemble the bikes are repeatedly delayed at sea and on the docks.
"It is costing me thousands," Bibee said. "It's really frustrating; there's nothing we can do about it."