Sporadic Labor Unrest Pushes Shippers To East Coast
Disruptions in the Port of Los Angeles, Long Beach, and elsewhere on the West Coast resulted in widespread disruption that has changed the balance of trade between the two coasts. Data released by CBRE Inc. found that cargo volume at East Coast ports increased by 7.6 percent in 2014 compared to only 3.2 percent growth seen at West Coast ports. The Journal notes that the report found that the larger increase in East Coast port growth was the result of shippers attempting to avoid the bottlenecks at California’s ports stemming from the labor dispute between the International Longshore and Warehouse Union and the Pacific Maritime Association. Los Angeles Mayor Eric Garcetti announced the formation of Eco Flow, a new trucking company designed to resolve the ongoing dispute between truck drivers backed by the Teamsters Union and Total Transportation Services, which the drivers allege unfairly categorized them as Independent Contractors and imposed high hours with little pay. The new company, which is employee-owned and does not classify drivers as contractors, aims to maintain vehicles to environmental standards and increase efficiency to reduce pollution. Eco Flow Chairman Jonathan Rosenthal said the company will “serve as the new model for port trucking…in which drivers have a vested interest in the future success of the company while providing a stable and productive workforce.” Now that the worst of the trade disruptions have abated, the economic impacts are becoming clear. The US trade deficit increased in March to $51.4 billion, its largest point since 2008, largely due to a flood of imports that had been held up by the port disputes. In February, when delays were at their worst, the $35.9 billion deficit was the lowest since 2009. Port officials say the backlog could take three months to clear.
What This Means For Small Business Many small businesses are active in import and export, relying on a fair and efficient port system to transport goods to and from foreign markets. If labor unrest returns to Los Angeles and other regional ports, it could exacerbate the eastward shift of shippers and make it harder for companies to get their goods into and out of the Los Angeles area.
Additional Reading
Other news media outlets covering the port situation include the Los Angeles Times, the Wall Street Journal, the Boston Globe, and Fortune.
