AGTC’s Friedmann says lack of ILWU-PMA contract could be “dangerous, permanent”

Agriculture Transportation Coalition (AGTC) Executive Director Peter Friedmann has again warned that the lack of a West Coast labor contract between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) could be “dangerous” and “permanent.”

Friedmann provided AJOT with an update sent to AGTC members on the dangers created by the lack of an ILWU-PMA contract: “Currently, too many West Coast marine terminals are operating on reduced schedules, some are open only four days a week, creating massive disruption and trucking, storage expense for agriculture exporters. Terminals are closing because they lack sufficient volume of import containers to justify hiring the longshore labor to keep them open. So, both the terminal operators and the longshore labor are losers.”

On the trend of cargo being shifted from the West Coast ports to East Coast ports, Friedmann explained why cargo losses could be permanent:

“The uncertainty that accompanies marine terminal operations without a labor contract, creates a disincentive to invest in additional facilities through which cargo will transit West Coast gateway ports. For example, transload facilities that might have been built to serve a West Coast gateway are being built to serve cargo through East Coast gateways. The same for warehouses, cold storage facilities, etc. Once those are built, the millions of dollars spent will not be abandoned – the cargo will continue to move through those facilities for years, even decades, to come. This makes it even more challenging for the West Coast gateways to claw back lost import container market share.”

Significant Market Loss

Friedmann noted that there has already been a significant loss of market share by West Coast ports: “What was once the West Coast’s 80+% share of import containers, is now 50+%. It shifted to the Gulf and East Coasts. This was not simply driven by the COVID supply chain crisis, but rather an ongoing trend of many years. That trend began in earnest 20 years ago with major importers establishing distribution centers near East Coast ports. To serve their importer customers, ocean carriers changed routes, shifting some West Coast port calls, to East Coast port calls.”

Friedmann noted that while there have not been major disruptions since the ILWU-PMA contract expired last June, there have been “periodic disruptions.”

Friedmann said that U.S. West Coast (WC) ports are essential to the competitiveness of U.S. agricultural exporters: “U.S. agriculture’s largest international markets are in the Asia Pacific: Korea, Japan, China, Vietnam. The most direct and fastest route from U.S. agriculture origins is by truck or rail to the West Coast gateways, then straight across the Pacific to those customers. U.S. ag faces extremely competitive global sourcing competition so (it) must be faster and less expensive to keep our markets. But if the import cargo and the ships carrying it, is trending to U.S. East Coast ports and away from the West Coast, exporters have fewer vessel sailings. This will be felt for many years.”

As Friedmann, explains: “Some agriculture can be sold at sufficient prices to afford to pay for alternative shipping routes, even if more expensive. For example, some almond shipments that ordinarily would load on ships at nearby Oakland, are railed all the way to Los Angeles/Long Beach ports. Others are railed all the way to the East Coast ports for loading on the vessels.

But most agriculture cannot afford to ship in these lengthy alternative routes. No one is going to dray a load of hay from Western origins all the way to Houston or the East Coast – the sale price of that hay does not generate sufficient revenue to pay for trucking that far.

So, unless it can be loaded efficiently at nearby West Coast ports, that hay just won’t be sold overseas, it will have to be dumped on the U.S. market. It is essential that U.S. West Coast ports not only gain a contract, but increase efficiency, in order to regain market share and cargo volumes.

Ports on the East and Gulf coasts are expanding by hundreds of acres, something West Coast ports cannot do.”

Friedmann says the AGTC’s mantra is: “There is nothing we produce in agriculture or forest products here in the United States that cannot be sourced somewhere else in the world. If we cannot deliver affordably and dependably, our foreign customers will find other sources.”

He concluded by warning: “We have too many examples of losing customers due to transport/marine terminal disruption, and not being able to regain them. Neither the ILWU nor PMA should take for granted U.S. agriculture export cargo. U.S. agriculture must fend off, every day, competition from producers of the same or similar products, in Brazil, Argentina, Chile, Holland and elsewhere.”