Jim McKenna, president of the Pacific Maritime Association
Jim McKenna, president of the Pacific Maritime Association (PMA), reported that the Ports of Los Angeles and Long Beach have seen the highest number of COVID cases among U.S. West Coast ports and that thirteen longshore workers have so far died.
McKenna, who spoke to the Propeller Club of Northern California on February 2nd, said that approximately half of the current 855 COVID cases afflicting longshore workers at the Ports of Los Angeles and Long Beach had occurred since January 1st.
McKenna reported that there have been 74 COVID cases in Northern California including two longshore worker deaths and 110 cases at ports in Oregon and Washington with no deaths.
McKenna said “we mourn this loss of life and are working with the ILWU to constantly provide the best protection for our workforce so that they can continue to do the vital job that they do to support the U.S. supply chain.”
McKenna said that the State of California had elevated the importance of longshore workers as essential to receive COVID vaccines, but at the moment no vaccines are available.
To assist longshore workers who become ill, the ILWU and the PMA have established two web portals. One portal allows longshore workers to report positive and negative tests of the virus and a second portal allows longshore workers, who have been taken ill by the virus, to be compensated during their convalescence.
Southern California Congestion Issues
The congestion at the Ports of Los Angeles and Long Beach continues: “Carriers are bringing in containers to the Southern California ports as the shortest distance to U.S. ports from Asia to drop off and return with new imports from Asia.”
This additional business has been slowed down “due to warehouses being full or slowed down by COVID cases so that containers remain at terminals longer.”
A chassis shortage then results when containers are kept as storage for longer periods of time waiting to be unloaded and not available for additional imports arriving at the two ports. That situation is further complicated by the loss of working time suffered as longshore workers become ill with the virus.
Cost Competitiveness Problems for U.S. West Coast Ports
McKenna discussed two reports that the PMA commissioned in 2020 to look at competitive cost differences between U.S. West Coast ports and U.S. Atlantic and Gulf Coasts ports as well as a comparison with the two West Coast Canadian ports of Vancouver and Prince Rupert.
The reports showed that U.S. West Coast ports are more costly to operate due to land, labor and regulatory costs than the Atlantic and Gulf Coast ports. McKenna particularly singled out clean air and zero emission mandates by the California Air Resources Board as undermining the cost competitiveness of California ports.
One Mercator study, commissioned by PMA, warns that high U.S. rail costs and other factors could cause U.S. West Coast (USWC) ports to lose between 15% to 45% of intermodal import business to British Columbia (BC) ports by 2030.
The report says 15% of “Intact Intermodal import volumes” could be lost by 2022 and over “45% of the USWC’s current intact intermodal import traffic is at risk of diversion to BC ports over the balance of this decade.”
The report explained the additional costs at USWC ports: “USWC ports have substantially higher costs for ship-to-train handling. SPB (San Pedro Bay) costs are about $120 higher than in BC (British Columbia). Surcharges include the Harbor Maintenance Fee in the US (0.125% of cargo value, which we estimate to be about $90/container) and the Alameda Corridor Fee in San Pedro Bay ($26.33 per TEU, or nearly $50 per container).”
The report also found that the Southern California ports of Los Angeles and Long Beach, which utilize the Burlington Northern Santa Fe (BNSF) and Union Pacific Railroads (UP), face higher rail costs delivering containers to and from Midwest destinations. This contrasts with lower rail and terminal handling costs via the Ports of Prince Rupert and Vancouver, British Columbia utilizing Canadian National (CN) trains.
So, Ports of Los Angeles and Long Beach intermodal container rail shipments are higher than from Ports of Prince Rupert and Vancouver rail shipments to the following destinations:
The report cites the Canadian investment in port and rail-handling infrastructure at the two Canadian ports and warns: “Even without the development of Port Metro Vancouver’s Roberts Bank Terminal 2 later this decade, capacity expansion projects already underway in container terminals in Prince Rupert and Vancouver could provide those two ports with the physical ability by 2022 to divert approximately 15% of the Intact Intermodal import volumes now moving through San Pedro Bay and the Puget Sound [Ports of Seattle and Tacoma].”
The Mercator report notes that investments in Vancouver and Prince Rupert terminals can spell loss of markets for U.S. West Coast ports: “Of the roughly 1.2 million TEUs/year of new capacity being added to these two terminals by or before 2023, at least 630,000 TEUs should be available for import flows.”
McKenna stated that one reason the Canadian National Railway (CN) was cheaper was that “it utilized one less locomotive on its service due to flatter topography” compared to more mountainous routes that UP and BNSF trains must negotiate.
McKenna said only one meeting had been held with the two U.S. railroads due to the COVID situation in 2020 and that follow up meetings would occur when the virus situation had subsided: “all action has been put on hold until the pandemic is under control and freight patterns return to normal.”
ILWU Contract Negotiations In 2022
McKenna is “hopeful” about contract negotiations with the ILWU scheduled to begin in 2022. He said that both sides need to represent their issues and concerns and that hopefully the parties would find common ground so as to be able to produce a new contract and labor agreement.
Howard Terminal Ballpark Threat To Port Of Oakland
In answer to a question from Scott Taylor of GSC Logistics regarding the impact of the proposed Oakland A’s Howard Terminal ballpark on Port of Oakland operations, McKenna responded: “We are concerned that it could choke off business. We work closely with PMSA (Pacific Merchant Shipping Association) and, like them, are concerned that the project could create congestion at the Port.”
McKenna noted that the Port of Oakland has been attracting new business, in part due to congestion in Southern California, and that this has been a reflection of collaboration between longshore workers, truckers, port officials and supply chain managers. He worried that these gains could be undermined by the proposed Oakland A’s ballpark.
In answer to another question, McKenna disagreed with an assertion made by an Oakland A’s representative that there was sufficient room for the ballpark and for Port of Oakland operations. The assertion by the A’s that Port operations could function with less space was something “I have never heard before” and did not agree with: “We are always looking for more space to work in and we can always use more space.”