Daily Archives: January 12, 2015

Infrastructure Damnation #13: Ports & Labour Strikes

Last year, in the fourth quarter during the critical Christmas shipping season, truckers, clerks, dockworkers, and other union workers went on strike and effectively closed the Ports of Los Angeles and Long Beach. The Port of LA typically receives over 330,000 TEUs (Twenty-Foot Equivalent Units) of loaded inbounded containers each month, which equates to roughly 4 Million or so TEUs a year. A single TEU container can hold up to 47,000 lbs of cargo and can accommodate 796 bushels of soybeans or approximately 6,192 shoeboxes. (That’s a lot of shoes! At the rate of 1 pair a day, it would take over 17 years to wear them all.) And while we haven’t yet been able to find a tally of the losses, as a benchmark, if the ILWU (International Longshore and Warehouse Union) went on strike and shut down all the west coast ports, estimates are that it would cost the US economy 2 Billion a day. A complete shutdown at the ports of Los Angeles and Long Beach would, thus, likely cost the US economy over 1 Billion a day since, of the roughly 116 M short tons of foreign imports that came into West Coast ports in 2012, 74 M (over 60%) of those short tons were through the ports of Los Angeles and Long Beach!

In 2013, a 40-day labour strike occurred at the Kwai Tsing Container Terminal in the Hong Kong Dock Strike. This strike cost Hongkong International Terminals almost HK $5 Million in daily losses as the loss of over one third of the workforce caused average delays of 2 to 4 days for all ships. That’s a loss of roughly HK $200 Million!

In 2012, the industry was almost paralyzed when the East Coast ports threatened to go on strike on October 1, as this strike was only narrowly averted at the last minute. This strike could also have cost the US Economy Billions.

In 2008, in protest of the Iraq War, the ILWU encouraged longshore workers to “shut down all West Coast ports” by walking off the job on May 1, 2008 to “Make May Day a ‘No Peace, No Work’ holiday”. On that day, more than 10,000 ILWU workers from all 29 West Coast ports voluntarily stopped work, effectively shutting down all west coast ports for a day.

In 2007, we saw the German National Rail strike of 2007. While it was only for 3 days, starting on November 14 and ending on November 17, it was the largest strike in history against Deutsche Bahn, shutting down freight service as well as passenger trains. Even though management brought in managers and other employers to keep trains running, more than 40% of freight trains — needed to carry cargo to and from docks — were halted. The strike cost over € 50 Million a day.

Strikes aren’t a new occurrence. We can keep going, all the way back to (at least) the 1792 Philadelphia River Pilot’s strike. More importantly, since unions aren’t going anywhere (and are, in fact, gaining ground in the emerging and newly emergent economies), strikes aren’t going anywhere either.

And they will bring your global trade to a halt if you are not prepared for them.

How do you prepare for them? Keep an eye on all of the ports, rail, and trucking companies you use to move your goods and when their union contracts expire. When expiration draws near, monitor the situation. If it looks like talks will break down, make sure you have alternate options at the ready. Have plans that use other ports, and other trucking companies, even if those ports are further and those trucking companies cost more, if the goods are critical to your bottom line — and if they are strategic, and small enough, consider air freight from a secondary airport to a secondary airport. (Solutions like FreightOS can often help you identify nearby ports and airports and relative costs.) While the hope is that you will never need to use less efficient and less cost-effective options, if the alternative is risking your goods trapped in a port for months, a less profitable sale is still much better than no sale. (Remember, No Sale, No Store.)