Cargo diverted from West Coast ports may not return
Over the past few months as congestion and delays grew at West Coast ports, shippers using the West Coast ports began to divert more and more cargo to the East Coast ports in anticipation of a possible port strike and ongoing delays. Many in the industry believe it is likely that a portion of that cargo will remain routed to the East Coast.
The larger East Coast ports has seen growth outpace growth at the West Coast ports by over 10 percent, compared to only a 1.6 percent increase a year ago. The increase in traffic directly corresponds with the slowdowns and delays on the West Coast.
In the fourth quarter of 2014, East Coast ports had more growth than any of the 11 previous quarters, according to Fitch Ratings. “With each labor event, some diverted cargo has not returned, and this seems to be the case for some West Coast ports coming out of this most recent contract negotiation,” according to Fitch.
Many shippers remain concerned that delays around negotiations will continue to happen. If they are happy with the service on diverted cargo, there is a strong chance that they will not change back to help avoid future issues. West Coast ports operated far below normal efficiency during contract negotiations.
After nearly 9 months of negotiations, the two parties have reach a tentative agreement. It is believed that it could take up to a few months for the contract to be ratified by the union. Port Operations are resuming, but it could take months for the backlogs to be cleared up at the busiest West Coast Ports.
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