The new multi-billion-dollar expansion of the Panama Canal opened on Sunday. The expansion accommodates much larger container ships, which means more route options for shipping companies. That prospect should place West Coast ports — specifically, those where labor unions have a strangle hold on port employment — on high alert.
Experts are already warning of the impact the expansion of the Panama Canal will have on local ports. KIRO 7 reports:
“The concern is that the $5.25 billion Panama Canal expansion will allow container ships to bypass Seattle or Tacoma altogether. Every day, thousands of containers that come in on ships are picked up by cranes, then are loaded on to trucks and rail cars to be delivered all around the country.
“Ships come from Asia, arrive in Seattle, then (containers) are trucked or trained to the East Coast.
“But this new, expanded Panama Canal will give shipping companies the choice of bypassing local ports, going through the canal and all the way to East Coast ports instead.
“That would shorten the one-way trip from Asia to the East Coast by roughly five days.”
A recent report predicts that the expansion could “shift about 10 percent of the Asia-to-U.S. container traffic from West Coast ports to East Coast terminals by 2020.” In order to stay competitive, it is paramount that the Ports of Seattle and Tacoma provide an economically competitive option for companies, beginning with providing a business-friendly environment that promotes certainty.
As Port of Seattle Commissioner John Creighton put it, “We have to really be at the top of our game to be a competitive gateway.”
Unfortunately, the recent behavior of the International Longshore and Warehouse Union (ILWU, a.k.a. longshoremen) does not inspire any degree of confidence in the certainty that logistics businesses particularly depend upon.
The longshoremen caused port officials plenty of grief in 2014-15, when the union led a six-month long labor dispute against the Pacific Maritime Association (PMA), the group representing port companies. In fact, due to port slowdowns along the West Coast (including Tacoma and Seattle), our state lost a whopping $769.5 million in economic activity.
The PMA accused the ILWU of deliberately slowing down work and causing port traffic. Though the ILWU denied the accusations, the facts spoke for themselves. In November 2014, reports indicated that port workers in Seattle and Tacoma refused to work more than a few hours a day. A study released by the Washington Council on International Trade verified previous reports. The Puget Sound Business Journal reported:
“Between November 2014 and the following March, productivity dropped roughly in half, from the usual 25 to 35 containers per hour to between 10 and 18 an hour, according to the study.”
Adding to the case against West Coast ports when the slowdowns occurred, companies began relying on East Coast ports to help pick up the slack. In other words, it’s the East Coast ports that provided much needed certainty during a long period of financial losses and uncertainty caused by labor union bosses in West Coast ports.
Making matters worse, during the course of a dispute between the longshoremen and United Grain Co. specifically, Jay Inslee sided against Washington State’s economic interests and with the longshoremen. Inslee removed police protection from state grain inspectors, resulting in the inability to do their jobs due to the death threats they received from longshoremen if they dared cross their picket line.
Without inspection, grain shipments were left to sit in warehouses and go to waste. In other words, Inslee chose the side of a union (which gave him campaign cash) at the expense of a billion-dollar industry in Washington State – and endangered the safety of state employees!
Remaining competitive will be an uphill battle for the Ports of Seattle and Tacoma — a battle that will require a change in approach, if not leadership.
Expanding the Panama Canal is a great thing, and will enrich people across the world.
However, none of that will change the geography of the earth. The West Coast of North America remains on a near Great Circle route with ports in Japan, Korea, and China. Products will continue to move from Asia to Western North America by West Coast ports and inland rail, because getting to the Panama Canal from Asia requires sailing past those same West Coast ports. Backtracking thousands of miles is a complete loser in this scenario.
Then again, Shift’s demonstrated geographical knowledge has never been shown to be any better than Shift’s political knowledge, so the secrets of earth’s geography are probably pretty safe here.
Clay Fitzgerald says
Your ignorance is showing, you know nothing about port operations, the effect of organized labor (ILWU) on the cost of doing business and how much revenue can be saved by larger container vessels being able to call on East and Gulf Coast ports with goods closer to their ultimate destinations as opposed to having to unload and transship by rail or truck to the Midwest and East Coast. Sure product from and destined for the Northwestern and Southwestern regions will still use the Ports of L.A. (the largest on the U.S. west coast) and to a lesser extent Seattle, Tacoma, Portland and Oakland, but the really big markets are much farther east. In addition, port operations in Canada and Mexico are less costly to the shippers than U.S. ports. And consider this, since Prince Rupert now has a rail line connected to the rest of Canada, it is now the closest port, geographically, to the Asian ports of the countries you mentioned.
Assuming all of that is true, what has it to do with labor unions in Seattle? Everything you mentioned is geographically-based (except weaker currency values in Mexico and Canada). Bashing local unions (as if other ports don’t have unions!) has no relevance.
Which confirms my points exactly. Thank you.
Clay Fitzgerald says
The ILWU has the highest paid membership of any union across the board. And when the go on strike or even instigate a slowdown, the costs to shipper grows incredibly expensive and shuts down ports on the entire west coast of the U.S.
BTW, you mentioned the geography first, I just used my knowledge to make the argument. I was hardly “bashing” unions (ILWU is hardly local), but merely pointing out how the effect of longshore labor costs affect decisions by the shippers to reduce their costs. Longshoreman typically make six figure salaries and have a virtual stranglehold on port operations from Bellingham to San Diego. When the have a slowdown or a strike in one place, they all do it… they shut down the entire west coast when they walk off the job. If that bashing, well, so be it, but it is factual.
Reliance on imports for your living is a fools game, that can only eventually (as in long ago) bankrupt the country.
Plenty of American products travel to Asia via West Coast ports. Much of Washington State’s agricultural output goes to Asia via the Columbia River and Portland. We could dig a canal the width of Panama itself and this trade would still flow through Portland.
Shift’s not bothering with all that because (a) as usual, they’re utterly ignorant of the very points on which they’re claiming expertise, and (b) any sufficiently large dose of reality will swiftly eviscerate any claim Shift makes.
Clay Fitzgerald says
So you’re claiming some sort of expertise on this subject, huh? From what do derive your so-called expertise… or is it something you just surmise to fit your narrow world view of the way your think things should be?
Visits to the Port of Seattle, mostly. I was surprised to learn that Seattle does not actually handle agricultural traffic from Eastern Washington, but perhaps I could have assumed that. (Roll on, Columbia!)
Also, the huge warehouses built in the South Sound ten years ago, feeding rail lines to the Upper Midwet. The locals had hoped for more value-added work, as I recall.
But it takes no genius to look at a globe. 🙂
Clay Fitzgerald says
So what you surmise is just that… no actual experience or a knowledge base of how things actually work in worldwide shipping.
In the overall scheme of things, it is less costly for the shippers to have cargo stay on the ships until they are closer to the destination with shorter transshipment by rail or truck. Since the east coast and upper Midwest markets are larger than the west coast, more ships that meet the new, larger Panamax vessel size will take more cargo directly to east coast ports. Sure, the local and regional import/export shipments will continue through west coast ports, but the costs of transshipping by rail or truck to the east coast from Seattle, Portland, Oakland or Los Angeles are one of the huge incentives for shippers to use the enlarged Panama Canal to get ship’s cargo closer to the final destination markets.
The Port of Seattle officials who gave us a tour of their facilities never claimed the Port handled any traffic bound for the East Coast — they considered the Upper Midwest to be the extremity of their business.
If you have figures showing a significant amount of trade via the Port of Seattle reaches the East Coast, then show them. Otherwise, there’s nothing to talk about here.
Clay Fitzgerald says
Well, tensie, it’s the shipping companies and the railroads that really know that info… they’re much closer to it than the “officials” of PoS. Plus, the gulf and east coast ports are still closer to the Midwest locales than any on the west coast.
Well, it’s the Port’s business to know such things. Again, the basis for any huge shift in West Coast port business as a result of Panama Canal expansion simply hasn’t been shown to exist.
Clay Fitzgerald says
Well, that remains to be seen since the new Panama Canal locks are just going through testing right now, but over the many years I’ve been associated with people in various aspects of port operations, administration and management in the Puget Sound region it was something that the shippers looked forward to and the longshoreman and stevedoring companies dreaded. The people with the PoS. particularly management and the commissioners, are politicians first and always looking to preserve their positions. When reality slaps them up along side their pinheads they get kinda dumb struck… just like any other politician.
PoS has lost a lot of business because the transoceanic shipping is highly competitive and hard to make lucrative. The last two large U.S. flagged merchant shipping companies, American President Lines and SeaLand, are now both foreign owned. SeaLand was absorbed by Maersk, the Denmark based company. American President Lines is a wholly owned subsidiary of Singapore Orient Lines, formerly Neptune Orient Lines. I don’t believe that either one currently calls at any Puget Sound port.
The only two U.S. owned shipping companies currently operating out of ports in Puget Sound are Totem Ocean Trailer Express, with weekly voyages from the Port of Tacoma to Alaska, and Matson Lines with sailing from Seattle and other west coast ports, to Hawaii and U.S. possessions in the Pacific. Under federal law only ships built in the U.S. and operated by companies owned and operated here can carry cargo and passengers between two U.S. ports. All other shipping companies that call here are foreign based, mostly in Asia. Of the 10 largest shipping companies in the World, six are Asian and four are European. Those companies will use the routes that make the most sense economically and if they can take larger vessels through the Panama Canal that are less expensive to operate and get closer to the ultimate destination… they will do so and the volume of cargo transshipped through the Ports of Seattle and Tacoma will be less, and the same will be true for other west coast ports, too. If that weren’t true, then there would have been no point for the increasing the canal’s capacity.
Since you won’t provide any actual statistics on flow of goods, and your anonymous anecdotes are no more conclusive than my observations, we’ll just have to wait and see.
As you don’t seem to understand that West Coast trade with East Asia simply won’t go via the Panama Canal, no matter what the capacity of the latter becomes, your readers are free to question your self-proclaimed knowledge of this subject.
Clay Fitzgerald says
Well, tensie. if you want to continue to be the way you are, a complete jerk, then so be it… you have every right to be just as moronic as you want to be.
You say I haven’t provided any actual statistics on this issue, but neither have you. You’ve merely wrapped yourself up in your own opinion and have presented nothing to back it.
Now, get this… do you really think that the Panama canal locks would have been expended at the cost of five and a quarter billion dollars if there wasn’t going to be an economic advantage for using it for the shippers? Just how stupid are you? Your declaration there won’t be more direct shipping via the Panama Canal and fewer container vessels using west coast ports as transshipment points is only your opinion base on whatever you’ve managed to surmise from limited knowledge and experience. Tensie says, “Oh, I got a tour of the PoS one time and now I are a expert, duh!”
You say I haven’t provided any actual statistics on this issue, but neither have you.
No, I’ve merely noted the obvious. You’ve claimed insider knowledge but have demonstrated no actual expertise. Since no one has shown even one dollar of international trade flowing via West Coast ports from East Asia to our East Coast, why do you continue to assume such trade exists?
“But it takes no genius to look at a globe”
Perhaps that’s why you can look at a globe or any other facts staring you in the face and not see the big picture. If all those containers surprisingly weren’t outbound agricultural products, what would you be surprised to learn they were? Maybe inbound Asian consumer products? Products that could benefit in saving both shipping time and costs by bypassing West Coast ports entirely and sending huge container ships directly to East Coast ports through a widened Panama Canal?
“Also, the huge warehouses built in the South Sound ten years ago, feeding rail lines to the Upper Midwet (sic) The locals had hoped for more value-added work, as I recall”
You should petition Congress to enact Directive 10-29. It would mandate all shipping of Asian products into the US be via West Coast ports, regardless of time factors, cost or any other reason. We can’t let those “huge warehouses built in the South Sound ten years ago, feeding rail lines to the Upper Midwet (sic)” go to waste. This sounds like government intervention is sorely needed. After all, as you recalled, the locals had hoped for more value-added work and their union should be propped up, no matter the cost.
If all those containers surprisingly weren’t outbound agricultural products, what would you be surprised to learn they were? Maybe inbound Asian consumer products?
Most of us can tell the difference between a ship which is outbound from a port and one which is inbound to it. If you continue to need intensive instruction on this point, I’m sure we can find a three-year-old who can try to explain it to you.
Products that could benefit in saving both shipping time and costs by bypassing West Coast ports entirely and sending huge container ships directly to East Coast ports through a widened Panama Canal?
So, how much trade currently flows through West Coast ports to East Coast cities? (Please note that even Clay was bright enough to duck that question entirely, and you certainly don’t want to appear even stupider than he routinely does…)
“Most of us can tell the difference between a ship which is outbound from a port and one which is inbound to it”
Yet you were surprised to learn most of the outbound Eastern Washington agricultural products didn’t go through the Port of Seattle, which highlights your total lack of knowledge about shipping. You already admitted you gained your vast expertise in global shipping through a tour of the Port of Seattle.
“how much trade currently flows through West Coast ports to East Coast cities?”
Just how does the beret-and-goatee gang down at Komrade’s Koffee think consumer products made in China, Korea and Japan get to East Coast markets?
Clay Fitzgerald says
You are merely a boring troll so it’s time to end this
Bye bye tensie boy.