Tuesday, June 23, 2015

West Coast the Best Coast?


Post-strike, Pacific ports regain reliability edge over east coast.

The long-running labor disputes at west coast container ports backed up ships and shipments, causing shippers to reroute some cargoes to east coast alternatives such as the ports of Miami and New York/New Jersey. A new study suggests they may want to rethink their strategy.

During the two-year period ending December 2013, there was “not a single month” where schedule reliability was at a higher level to the east coast than to the west, reported SupplyChain 24/7. In fact, throughout this period its data shows that the reliability gap varied from 2.4 to 14.9 percentage points in favor of the west coast.

This changed when congestion hit west coast ports in July 2014, peaking early in 2015 as labor negotiations stalled, destroying the schedule reliability of ocean carriers serving the region. At the low point, just 10% of sailings arrived on time. Despite these bleak negative months, the overall score, for the full study period from January 2012 to April 2015, still has the west coast ahead with an on-time delivery frequency of 74.1%, compared with 70.9% for east coast services.

The voyage from Asia to the US east coast is longer, while the requirement of Panama or Suez Canal transits also present a potential delay in the schedule. East coast-bound ships include more ports in their itinerary than respective strings to the west coast, further increasing the chance of delays. Ocean carriers showed little or no willingness to increase fuel consumption by steaming faster to make up lost time.

Moreover, the northern east coast ports, such as New York, have their own congestion issues, and are far more likely to face weather-related stoppages in winter – an almost non-existent problem for California ports. Shipping to the east coast is also more expensive, at least before you factor in overland shipping. The long-awaited completion of Panama Canal widening could also help by allowing larger ships to transit the canal.

When the west coast port delays were at their peak, there was no telling how bad it might get, making searching for alternatives a reasonable response from supply chain managers. But now, depending on a consignment’s final destination, it may be that shipping from the (Far) East, the west coast is the best coast once again.


Kirk Shearer
President
TOTALogistix
www.totalogistix.com <http://www.totalogistix.com/>
800-989-0054 x103

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