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U.S. West Coast Update: Air Carriers, East Coast Ports Likely to Benefit from Prolonged Contract Negotiations

According to several media sources, contract negotiations continued this week between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) with no significant developments. However, several peripheral storylines have surfaced that help illustrate how prolonged negotiations are impacting other stakeholders in the global transportation industry.

As reported by the Journal of Commerce, periods of labor negotiation at ocean ports typically result in an unintentional increase in air freight volumes. "This could be a shot in the arm for air cargo,” commented Brandon Fried, Executive Director of the Airforwarders Association. "It's reliable, and people who can't wait switch to air forwarders."

"Should the negotiations go badly," added James Woodrow, Director of Cargo at Cathay Pacific Airways, "I expect that we will start to see increased volumes quite quickly. Obviously if there is a complete shutdown air freight volumes will go off the chart. So at the moment we are just waiting and seeing."

In addition to air freight carriers, port officials on the U.S. East Coast are gearing up for potential volume increases, as traditional West Coast shippers look to reroute cargo in anticipation of a coast-wide strike or slowdown. For example, the Port of New York and New Jersey recently announced that it "has made significant improvements in its ability to move cargo on and off port terminals, with more improvements due to follow," positioning themselves as a viable destination for rerouted volume.

Finally, experts project that import volume at major U.S. container ports will total nearly 1.5 million TEU in June, an increase of 7.5% over the same month in 2013. The spike has been attributed to "unusually high" shipment counts by retailers eyeing the expiration of the current West Coast dockworker contract on June 30 at midnight.

SPARX logistics will continue to monitor this situation and keep our customers informed of the latest developments. If you have any questions or concerns related to specific shipments, please contact your SPARX representative.