US ports have been challenged in recent years with global competition, labor unrest and competition among US ports themselves. For example, the past few months have been trying for the Port of Baltimore as it works to resolve an ongoing labor dispute. Because of the uncertainty of the situation, shippers are diverting cargo to other ports. Meanwhile, the ports of Tacoma and Seattle are facing increasing competition from other West Coast ports as well as those in Canada. As such, the two ports have opted to work together.
The Port of Baltimore, the country’s largest port for automobile cargo, has struggled with labor issues which resulted in a strike in October. However, a Federal arbitrator ruled the strike invalid because it disrupted shipments of cargo containers that are covered under a separate master contract with a no-strike clause which covers the entire East Coast. The two sides agreed to a 90-day cooling-off period after the ruling that ended the strike. That cooling-off period ended on January 13th and issues have yet to be resolved.
Various issues are at hand including allowing workers that face disciplinary action to be able to remain on the job while their case is reviewed, changes in the wage scale and changes in policy concerning who is allowed to operate heavy machinery used to unload cargo.
According to the local press, while the port tries to settle these and other issues, shippers are diverting cargo to other ports – how much and to what ports are unknown at this time.
Meanwhile, on the West coast, the ports of Tacoma and Seattle have agreed to share information about operations, facilities and rates to help the Puget Sound area. Both ports caution that this information sharing is not a prelude to a merger of the two ports but rather a way in which to compete in a changing ocean freight environment.
The two ports have seen the shipping industry concentrate its activities by sharing ships and by utilizing larger, more efficient vessels which limit their calls to one or two ports on the West Coast. Also, ports in Canada and Mexico are seeking to attract container lines to their facilities. By doing so, container lines can avoid U.S. port taxes and transport containers from those ports to the Midwest by rail.
To remain competitive, US ports will need to take creative measures such as that Tacoma and Seattle are doing. However, labor disputes will always be a concern for ports but how well disputes are handled will be key to keeping freight from being diverted.