“California Dreamin'”

West Coast port congestion has been the chief topic at almost every maritime or transportation conference this year. Trends and developments within the maritime and transportation industry are always the chief topics in this “Trends and Developments” commentary, naturally, and most of the time West Coast congestion is the topic being discussed. Let’s take a few minutes to see if there are identifiable trends as a result of the logjams, and if these trends have led to specific developments.

It wasn’t too bad up until the Fourth of July weekend, but because of some serious miscalculations with respect to expected container volume, everything seemed to fall apart. The backlog of vessels in LA/Long Beach increased to the point where, on any given day, seven to eight dozen ships could be seen idled and committed to “contingency anchorages” and “drift boxes”. This embarrassing situation persisted throughout the rest of the summer, through the month of October and into mid-November. As a result of these unscheduled waiting periods carriers saw millions of dollars disappear from the bottom line, and delayed holiday season shipments will likewise result in severe financial losses for major retailers.

The headlines in maritime and logistic periodicals now boast, however, that … “U.S. West Coast backlog cleared”… “Congestion over at LA-Long Beach”… “LA-Long Beach overcomes pier pressure”… “San Pedro ports work off backlog” … “LA-Long Beach works off backlog”. It’s as though a miracle had taken place. Well, if it wasn’t really a miracle, what did happen?

First of all, several thousand new hires were added to the payroll, and that’s probably the only worthwhile development in the whole scenario. Secondly, more than a hundred vessels diverted to other West Coast ports in order to avoid heavy financial losses, and this is a development that cannot be described as worthwhile. A significant number of shippers have planned to avoid LA-Long Beach whenever delays seem to be a likelihood, and some of these carriers have decided to make this diversion permanent. This year’s miscalculation brought about a costly and unforeseen challenge which will forever haunt those who had become complacent because of the port’s overall good fortune. There was a sleeping giant South of the border in the form of three slowly emerging container ports. But another giant … this one from overseas and very much awake … stepped in and began to operate those relaxed ports. A goodly number of diverted vessels were seduced by these Mexican ports and it’s highly unlikely that those diverted ships will return to the hustle and bustle of Southern California. Hutchison is a big time operator with incalculable assets and properties, and those whose laxity opened the door for this competitor will experience many a sleepless night.

Could this situation have been prevented? Of course it could. For the last ten years maritime consultants have been enthusiastic in their predictions about container port growth. It isn’t as though port authorities lacked the time or the money to act accordingly. They lacked the space. And they lacked common sense. Well, the space is gone because God made just so much real estate. But He also provided us with common sense, and the failure to make use of it is the reason why shortsighted port officials will be held accountable for the pressures now being felt in the distribution chain.