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ILWU & PMA meet on critical manning issue for LA-LB
The ILWU and PMA recently met to discuss a key issue involving non-automated terminals at the ports of LA and LB. If they are successful, they would remove a major hurdle that is standing in the way of a new coastwide contract.
The ILWU Local 13 wants to increase manning on top-handling and other equipment. This requirement has significantly delayed further conversations. Manning requirements will apply only to Southern CA. However, they must be agreed to in the coastwide contract.
Several sources said recent ILWU job actions ceased over the weekend in advance of Monday’s negotiations. The job actions affected cargo handling and resulted in late vessel arrivals and departures at many of the 12 container terminals in LA-LB.
West Coast longshoremen have worked significantly less hours this year. Retailers continue to divert as much discretionary cargo as they can to ports along the East and Gulf coasts.
Even if negotiations are successful and a tentative agreement is reached next month, it can take two to three months for the ILWU membership to ratify the contract. While that occurs, retailers will continue to divert cargo away from the West Coast.
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GRI success hastens signing of 23-24 service contracts
Trans-Pacific carriers have been successful in pushing spot rates higher with their April 15th GRI. Therefore, shippers and importers are signing service contracts for the coming year. However, the levels are significantly lower than a year ago. There has been a noticeable increase in contract signings this week as most existing deals are set to expire April 30th.
The floor for 2023-24 service contracts was reached at about $1,200 per FEU for the West Coast and $2,200 per FEU to the East Coast for major importers. Mid-sized retailers are mostly in the range of $1,350 to $1,500 per FEU to the West Coast, with East Coast prices about $1,000 higher.
Carriers have announced a second GRI that would take effect May 1st. However, they may not succeed in implementing it. Demand in the eastbound Pacific is not surging and shipments are generally not being rolled at Asian load ports.
NVO’s are advising their clients to wrap up their negotiations soon. If they don’t, they may not be able to secure the vessel space commitments they need during the summer/fall peak shipping season.
Spot rates are likely to remain fluid the rest of the year. Therefore, some shippers are asking for contracts with a mix of fixed and floating rates. As a result, they would be able to ship under the more favorable rate at the time. However, carriers are likely to use blank sailings to manage capacity as volumes fluctuate throughout the year.
Inventory overhang from the past year is complicating the decision as to how much new product importers are ordering for the peak season. The US retail sales-to-inventory ratio for February was 1.23, unchanged from January.
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About O’Neill Logistics
O’Neill Logistics is a leading third party logistics provider. We operate in California, Savannah, New Jersey. We service many verticals including Garments, Fashion Accessories, Footwear, Furniture, Home Goods, & Electronics. Additionally, we offer omni-channel distribution and all value-added services. Lastly, we focus on retail “drop shipment” fulfillment and item-level fulfillment services with same-day service offerings.
O’Neill Logistics has over 2 million square feet of state-of-the-art facilities. Additionally, we offer dray services to support the warehouses and provide distribution to retailers and wholesalers. Our reliable 3PL platform combines sophisticated technology with robust, flexible processing designs and speed-to-market gateway models.
Lastly, we aim to simplify your supply chain. We deliver exceptional service and can optimize your operational performance. Therefore, we aim to build, protect and foster strong business partnerships.
Please reach out to us if you have any questions or need assistance with your logistics solutions!