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Advisories ::
Congestion Hits Asia Ports
Extracted from The JOURNAL of COMMERCE ONLINE

For all the congestion choking marine on the West Coast, the problem is just as bad in Asia.

Because ships have been waiting for days at anchorage outside West Coast ports, they've been removed from their normal schedules, which for many vessels would have meant returning directly to Asia for more cargo. Not only are those ships delayed in making their return trips, they are not able to reposition the large quantity of empty containers that are desperately needed in Asia to move cargo back to the United States, carrier executives say.

"There are a lot of cancelled sailings from the Far East because the ships were idling on the West Coast and not able to return to the Far East," said T.F. Hau, senior vice president of operations and logistics for OOCL (USA) Inc. He noted that in an average week the industry moves 100,000 TEUs of containers back to Asia, meaning that because of the 10-day shutdown, nearly twice that number isn't where it needs to be. "There is a very serious equipment shortage in Asia," Hau said.

What that could mean, Hau and other carriers agree, is that November could be a light month for imports simply because the vessel and equipment capacity will not be available to handle the normal volume. That could take the pressure off of West Coast ports, giving them an opportunity to climb out from under the huge volume of containers they're now being asked to handle.

Equipment shortages are becoming the most critical by-product of the lock-out of the International Longshore and Warehouse Union by the Pacific Maritime Association, which ended on Oct. 9. Containers that have been offloaded at West Coast ports are stalled there because there aren't enough chassis. That problem is compounded by labor productivity levels that, according to the PMA, have declined since the docks were re-opened after President Bush requested an injunction and 80-day cooling off period under the Taft-Hartley Act.

"As of today, we are in the range of 20 percent below normal productivity, and when we resumed operations, over the weekend, we were 10-15 percent below normal," said John Pachtner, a PMA spokesman. "It's disturbing and worrisome that we do not see a trend towards normal productivity."

"A dog can eat the homework only so many time times," said Steve Sugerman, also a PMA spokesman. He said terminals along the coast report that the union has been supplying insufficient labor to fill clerks' positions, and that many clerks have been showing up for work as much as 90 minutes late.

Safety issues slow cargo handling

The ILWU says that it has advised its workers to be more safety-conscious amid the crush of cargo, and that productivity is also hampered by the unprecedented surge of freight resulting from the lock-out.

To make sure that longshoremen are working quickly and safely, teams from the California Division of Occupational Safety and Health were deployed to ports in Los Angeles and Long Beach on Saturday, a day after they arrived at Oakland's port to monitor work, said Hilary McLean, a spokeswoman for California Gov. Gray Davis. She said the decision was made by the state agency and that though Davis was notified, the directive didn't come from the governor.

None of this helps shippers, including large importers such as Gap Inc. who have said their earnings could take a hit because merchandise will be arriving at stores after the start of the holiday shopping season.

Along the West Coast, container lines have been unloading ships at the port at which they were anchored awaiting a resumption of longshore activity. That means that thousands of boxes need to be moved a second time, either by truck, rail or vessel, to their final intended destination. Tons of cargo unloaded in Seattle/Tacoma and Oakland need to be moved to Southern California. The trouble, according to carrier executives, is that the two West Coast railroads, Union Pacific and Burlington Northern Santa Fe, are allocating space on north-south trains. Furthermore, carriers say, cargo that has already been unloaded can only be moved between U.S. ports on a Jones Act-qualified ship or a ship of the same carrier that moved the container from Asia. Because many vessel strings contain ships of multiple carriers due to today's complex alliance structures, it is proving difficult to move the cargo between West Coast ports, carriers say.

Carriers are asking customers to pick up cargo where it is currently located, even though the bill of lading may specify delivery at another port or an inland location. "We would encourage customers to pick up cargo at the place where it is currently sitting," said Mike DiVirgilio, senior vice president of trade management at NYK Line (North America) Inc.

Weeks until backlog is cleared

Carriers said cargo unloaded over the weekend or on Monday might be forced to remain inside the terminal for at least a week to 10 days due to the extreme congestion. Most believe the system won't fully flush out the backlog for several weeks.

The OOCL facility in Long Beach could work off the backlog by the end of October, Hau said. The NYK facility in Los Angeles, which OOCL uses as a member of the Grand Alliance, will take another two months to return to normal because it handles more ships, he said. Both the NYK terminal in Oakland and the Stevedoring Services of America facility in Seattle, the other two terminals used by the Grand Alliance, will return to normal in 2-3 weeks, Hau said.

Hau noted that certain vessel rotations will return to normal schedules relatively quickly. Those are trans-Pacific shuttle services that call at only one or two ports in Asia and just Los Angeles/Long Beach in the U.S. However, pendulum services that sail from Asia to the U.S. West Coast, then to the U.S. East Coast, then Europe before retracing those steps may not be fully restored to normal service for a few months. That means that trans-Atlantic services are also being affected.

A hearing on the Taft-Hartley injunction had been scheduled for Wednesday, but representatives of the PMA, the ILWU and the Justice Department have agreed to let the cooling-off period begin without a hearing. If the judge agrees, the cooling-off period would be retroactive to last Tuesday, when the temporary order was issued. That means the 80-day period would expire Dec. 27.

The two sides were waiting Monday for a federal mediator to reschedule negotiations on a new contract to replace the one that expired July 1. The key issues in the talks are management's efforts to introduce labor-saving technology and union attempts to expand work jurisdiction.

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