The 2:00 Minute Warning

Lots of stuff is happening in the transportation sector, so this week we’re taking a break from our series on how the supply chain impacts balance sheets to focus on two significant events: the shutdowns at West Coast ports and the I-95 bridge collapse near Philadelphia.

I know you are extremely busy and that there are lots of things on your plate, but … to understand what's happening at the West Coast ports, you need to listen to the interview we held this week with our friend Peter Tirschwell. As the Vice President of Maritime & Trade at S&P Global Market Intelligence and the Chairman of the Journal of Commerce’s outstanding TPM Conference, Peter and his team are all over the situation at the West Coast ports. 

Given that the contract between the PMA and the ILWU expired July 1, 2022, the ILWU appears to be expressing their frustration with the stalled negotiations by selectively disrupting some important ports on the West Coast. So far, they have effectively temporarily disrupted operations at the ports in Long Beach, Los Angeles, Oakland and Seattle. Peter shared some very interesting and important insights about what is happening with these negotiations.

First, while the two parties (the PMA and the ILWU) have agreed on several issues, they are miles apart on the wage scale. Apparently, the ILWU was looking for a 100% increase in base wages over the life of the contract. The ILWU subsequently reduced that demand to an 80% increase in base wages. The PMA appears to be offering somewhere in range of 40%. That’s a pretty big gap!

Second, the ILWU folks are smart and know the ports. That is why their strategy to temporarily disrupt – as opposed to shutting down the ports is very interesting. You have to listen to Peter explain how this strategy ties in to the ILWU wanting to avoid having the Biden Administration invoke the Taft–Hartley Act.

Third, what should concern every ocean shipper is the fact that virtually no one is predicting when the negotiations will be done and a new contract put in place. Peter offered some thoughts about what this means for shippers. Like I said, you need to listen to the interview and hear the factors each side is focusing on, a brief historical context of the current situation, and his thoughts on what to expect.

Switching from oceans to roads, this weekend shippers and carriers got some bad news when a tanker fire beneath I-95 caused a bridge to collapse. The collapse is expected to take a few months to repair and based on conversations with senior carrier executives, the detour around I-95 will be 40 miles. 

The delays will affect approximately 160,000 vehicles that travel that segment of the highway each day, and about 14,000 of these are trucks. LTL carriers servicing this area cautioned that it could impact service times and capacity. We wouldn't be surprised to see prices increase also.

If you’re looking for more information on either of these events, give us a call, send us an email, or schedule time to meet on Calendly.

BY MIKE REGAN, CO-FOUNDER OF TRANZACT

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