An unseasonably harsh blizzard season has shut down businesses along the East Coast for months, but things haven’t been smooth sailing along the Western Seaboard either. California ports were on virtual shut-down during a labor dispute, which has forced shipping lines and terminal operators to suspend loading and unloading of cargo ships over the last month. Following a year of chronic delays that left lines of vessels waiting as long as a week to berth at the ports of Los Angeles and Long Beach, an extended closure threatens to send painful ripples through the U.S. economy.
While the most recent reports on the issue say the end is in sight, shockwaves will likely resonate as the ports—and the supply chains themselves—recover.
According to Fortune magazine, retail and manufacturing groups project that a full, extended shutdown of the ports could cost the U.S. economy $2 billion a day. That’s because the LA and Long Beach ports are the country’s busiest, handling a combined 50 percent of all U.S. container freight and more than 70 percent of Asian imports.
The situation is forcing companies to reevaluate their distribution networks and implement port diversification strategies so they don’t get caught with all their eggs in one basket.
–Rich Thompson, JLL’s global head of Supply Chain Consulting.
Thompson also notes a rise in cargo volumes at East Coast ports, which gained nearly 20 percent in market share last year at the expense of the West Coast. “We expect some of this had to do with risk mitigation in advance of the labor contract negotiations,” he says.
He says there has also been a spike in demand for warehouses close to the ports. And this, he predicts will cause rents to rise in already desirable locations close to large populations.
Shortly before this blog was posted a tentative deal was struck, which has allowed workers in Oakland and at ports from San Diego to Seattle to begin clearing their backlogs. Read the full story here.
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