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There is a labor shortage at the ports because of the misjudgment, and the shipping companies and the union that represents the workers, the International Longshore and Warehouse Union, are scrambling to hire 3,000 part-time workers. The tight labor supply and kinks in rail systems serving the ports are causing congestion that is sapping productivity at the docks, because cargo containers are not being moved around as efficiently as they could be. If the delays get worse, as many observers feel they might, the backup could cause supply-chain disruption in a variety of industries throughout California. "We got into a situation where a lot of stars were aligned when volume was extremely high,'' said Jim McKenna, the president and chief executive officer of the Pacific Maritime Association, which represents domestic and international carriers and stevedores that use 29 West Coast ports and negotiates labor contracts with the union. The sharp increase in port traffic, which reflects an improving economy, began in June, well in advance of the ports' busy season, which normally starts around Labor Day when holiday merchandise begins to arrive. On Thursday, there were 67 ships at the ports of Long Beach and Los Angeles, 24 of them at anchor and the remainder at berths. Eight more were scheduled to arrive Thursday, while 11 were set to sail; 16 more were scheduled to arrive today, when 19 were set to sail. Twelve ships are expected Saturday, 17 on Sunday and 13 are expected on Labor Day -- a day off for longshore workers. John Bowe, president of the Americas region for APL, said, "The underlying cause is simply the sheer volume of boxes arriving on the West Coast -- and given the global nature of the supply chain now, that is not going to slow. That's straining the whole supply chain. There are labor shortages, the railroads are struggling to cope and trucking firms are also under pressure. And it's not a problem that can be fixed overnight.'' Long Beach and Los Angeles are critical because they handle 75 percent of the total dollar value of products imported to the West Coast. Business is booming elsewhere, too: Cargo volume is up 8 to 9 percent at the Port of Oakland this year, and it has increased between 8 and 11 percent at the ports of Seattle, Tacoma and Portland, said McKenna. So far, bumps along the supply chain are a nuisance to business but not so severe that they are visible to consumers, said Robin Lanier, executive director of the West Coast Waterfront Coalition, a Washington lobbying group for major retailers and others using the ports. She said businesses using the ports are holding inventory longer than they would like. Some businesses decided to ship early. Wal-Mart, for example, already has a significant amount of holiday merchandise in place in distribution centers, said Bob McAdam, vice president of state and local government relations at Wal- Mart. "From what I've been told, we're OK for the holiday season,'' he said. Some ripple-effect delays at the Port of Oakland have created concern at New United Motor Manufacturing Inc. in Fremont. The joint venture between General Motors and Toyota relies on a just-in- time supply system in which inventory moves quickly in and out of the plant. NUMMI receives parts via the Port of Oakland, and there have been some delays of 24 to 50 hours in unloading vessels and getting parts to Fremont, said Rhonda Rigenhagen, a NUMMI spokeswoman. "It's currently not affecting our production, but we are watching it very carefully because delays that extend beyond what we are seeing may begin to impact us,'' she said. Some of the ships at berth are waiting through three longshore workers' shifts (36-plus hours) before labor is assigned, said Merchant Marine Capt. Manny Aschemeyer, executive director of the Marine Exchange of Southern California, which monitors port traffic. Accordingly, the turnaround time for some of the ships at the ports is seven days or more, rather than the usual three to four -- "and that's not good news,'' he said Thursday. "If we're still riding this plateau we are on now and we get hit with a surge, it would be quite interesting,'' Aschemeyer said. The immediate, short-term fix to the backlog and labor shortage was a lottery system in which 3,000 part-time workers, called casuals on the docks, are being hired and trained. They come from a pool of perhaps 400,000 people who applied, hoping to be selected for the high-paying blue-collar jobs. The hiring scheme, the product of a compromise between the maritime association and the union, favors candidates with a connection to the industry -- long the traditional path to jobs on the docks -- but that did not deter several hundred thousand others from taking their chances. "Listen to what it says about the economy,'' said Steve Stallone, the union spokesman in San Francisco. "All the manufacturing jobs have been sent overseas, so all the jobs with good wages and benefits are gone. The only jobs that exist are Wal-Mart-style jobs -- low-wage jobs. All the goods being manufactured are coming to us from Asia, and so there are a few good jobs left on the docks, unloading those goods.'' Union and maritime association officials held a drawing on Aug. 19 and have begun training the first group of the 3,000 candidates -- at a cost to the maritime association of $3,000 per person, McKenna said. Each day, from 35 to 50 new workers become available, having learned "lashing,'' the use of ropes, and after taking basic safety training, learning how to drive tractors on the yard and passing drug and alcohol tests. How useful the new hires will be in helping to clear the congestion and deal with the increasing flow of cargo remains to be seen. The casuals will earn $20.66 an hour with no benefits. It is only when casuals become registered as longshore workers, at a base salary of $28.66 an hour, that they receive 100 percent health care coverage and begin to qualify for a pension. The compensation is good -- $100,000 per year on average with overtime, which is common. But it is difficult and dangerous work. Three days before the lottery was staged, a sailor on the China Shipping Lines' Xin Pu Dong at Long Beach was tightening lines, and one snapped. The recoil decapitated the sailor, Stallone said. "They'll find out what the work is like,'' he said of the new hires. The maritime association's McKenna said the employers are using the experience of the congestion to refine how they do their work, such as what should be the appropriate division of labor among rail, yard and vessel assignments. "Productivity is down across the board,'' because of the congestion, said Jon Hemingway, president and chief executive of terminal operator SSA Marine in Seattle. He said it's off by 10 percent at SSA operations in Long Beach-Los Angeles, while cargo volume at those terminals is up 10.3 percent. From January to July of 2003, SSA handled 6.6 million containers; it handled 7.3 million in the same period this year. Overall at the Southern California ports, cargo volume was up 17.5 percent in June and 24 percent in July, McKenna said. "Everything is manageable,'' he said, adding that if the problem is to be avoided in the future, shipping companies must be more accurate in their forecast of cargo volume. "Our employers have to have a healthier respect for how important it is to give what their absolute forecasts are,'' he said. "It's a very competitive business when you have a multi-employer situation,'' he added. (The maritime association has 72 members.) "You are asking people how they are going to do next year, and there is a concern (about) how that information is used.'' The employers fear, said McKenna, if they might lose competitiveness by disclosing information. Said the union's Stallone, "They knew how much cargo was coming and should have hired these people months and months ago and have them trained. "It says something about bad management. If they have the bookings of what is coming, how can they be so surprised? Especially when the union has been saying since the beginning of the year that we need more people. "It took them to August to get around to doing that.'' |
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