Last week, South Korea’s largest shipping company, Hanjin, announced it was pulling out of the Port of Portland beginning in March. Hanjin’s departure is a huge blow to the port, the shipper accounted for a whopping 80% of the Port of Portland’s business. It imported apparel for companies like Nike and exported apples and other crops.
Hanjin cites slowdowns as the primary reason for its decision. Last weekend, a Hanjin ship “sat for four days without being unloaded amid walkouts and lockouts.”
As Shift reported, port slowdowns have impacted most West Coast ports as the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) labor contract dispute continues. Among the issues holding up a resolution is a continuing disagreement of which party should handle added Obamacare costs. Slowdowns at the Port of Portland have been especially extreme.
After the ports across the West Coast resumed normal operations last Monday following weekend shutdowns, the ILWU Local 8 in Portland refused to get back to work until Tuesday. ILWU Local 8 has been the only local union chapter to completely walk off during the nearly nine-month contract dispute, having walked off in November as well.
The Oregonian points out that relatively high-paying blue-collar jobs are “already being edged out as the economy becomes less reliant on producing goods and more dependent on services.” Hanjin’s exit will deliver yet another blow to the availability of these blue-collar jobs in the area.
As Hanjin looks to Seattle and Vancouver B.C. ports to handle its business, economists predict hikes in supply chain costs as Oregon firms look to out-of-state ports to export and import goods. Higher supply chains costs means higher consumer costs.
Of course, what is Portland’s loss is Seattle’s gain… if Seattle can hold on to Hanjin’s business. Currently, Hanjin accounts for 25% of business at the Port of Seattle. It is still unclear how much more traffic Hanjin will bring in after March.
It is also unclear how much longer Hanjin will put up with slowdowns at any port across the West Coast. Economists point to the inevitable danger: if port disruptions and slowdowns continue, businesses may reconsider their reliance on shipping to the West Coast and look to alternative options. The L.A. Times,
Another looming threat is the widening of the Panama Canal, which will allow much larger cargo ships to head directly to the Gulf and East coasts, where ports are racing to expand.
With the canal project scheduled for completion next year, this is a bad time for the West Coast to give “themselves a bad name in terms of reliability,” said Jock O’Connell, an international trade economist.”
Since receiving an initial request back in November, President Obama has finally decided to take some intervening action. Obama ordered Labor Secretary Tom Perez to “jump-start stalled labor talks between shipping companies and the dockworkers’ union.” The L.A. Times,
“If an agreement comes in the next week, the aftershocks will be “a blip,” said Winer, the Wedbush managing director. But if it drags longer, the situation could be dire, he said.
“Six months would be a horror show,” he said. “Even if this lasts more than a month, it’s going to be a significant issue.”