West Coast port labor issues continue as some Los Angeles-bound rail shipments get paused
Aerial view of containers and cargo ships at the Port of Los Angeles on Jan. 19, 2022 in San Pedro, California.
Union Pacific is no longer accepting exports or empty containers at its Denver rail terminal destined for the Port of Los Angeles, a proactive move that reflects the supply chain issues that have arisen due to ongoing West Coast port labor issues.
By pausing rail shipments, shippers can find other ports to send goods rather than have them sit for extended periods of time in containers before reaching their intended destinations. That is critical for food and agriculture shipments, where products can spoil — the U.S. agriculture industry uses the West Coast predominantly for its goods.
The Port of Los Angeles is the nation's busiest port, processing $440 billion in cargo value per year. That market share has declined with more trade moving to the East Coast over the past year, at least partially due to labor issues on the West Coast that had supply chain managers worried about reliability of service.
These latest issues have arisen as the skilled labor union workers who work on the rail shipments are not arriving at the labor halls, according to CNBC sources.
Ocean carrier CMA sent an email today to clients that CNBC obtained notifying them of Union Pacific's decision. Union Pacific did not immediately respond to a request for comment from CNBC.
Berkshire Hathaway subsidiary BNSF and Union Pacific are the railroads servicing the West Coast ports.
"This is the ripple effect we are concerned about," said Paul Brashier, vice president of drayage and intermodal at ITS Logistics. "U.S. exports of protein and other products will start to back up in the inland ports. This will deteriorate rail productivity as a result of the growing container congestion."
Negotiations between the ILWU longshoremen union and the Pacific Maritime Association (PMA) continue to go on as scheduled this week, CNBC has learned. The subject of wages is still being hammered out. The talks are under the cloud of slow port productivity. The ILWU and PMA are not commenting, citing a media blackout.
The West Coast ports opened on Monday after multiple closures that began at the Port of Oakland last Friday when some union workers refused to report for assignments, However, issues remained at select terminals within ports from Los Angeles to Seattle, with labor slowdowns and shift closures.
Truckers tell CNBC they are still experiencing a "snail's pace of productivity" at the terminals. Data from various CNBC Supply Chain Heat Map data providers also show the delays.
ITS Logistics told CNBC its truckers were turned away by the terminal operator Fenix Marine Services, which is owned by ocean carrier CMA-CGM, at the Port of Los Angeles during the first shift Monday. They were picking containers from a variety of ocean carriers. Containers processed through the terminal include those owned by Maersk, OOCL, COSCO Shipping, Sealand (a Maersk company), and Evergreen.
Source: CNBC
