California Apparel News

The Holiday shipping season is turning into a lesson in patience.

Containerships at the ports of Los Angeles and Long Beach are taking as long as six to seven days to get their goods unloaded instead of the standard two or three days.

Because of the long wait, as many as 21 vessels have opted since late June to dock at other ports along the West Coast and in Mexico to avoid the wait.

While labor shortage and increased imports are partly to blame, so is the world’s biggest retailer, Wal-Mart Stores Inc., whose new shipping strategy started the pileup in September, and it promises to be the same for October. But the problem is only going to get worse.

On Aug. 25 and 26, Wal-Mart Stores Inc. held a private gathering in one of the Port of Long Beach’s rooftop meeting rooms. The world’s largest retailer met with shipping lines, trucking and railroad companies, and logistics people to coordinate the Holiday shipping season. The message was that Wal- Mart would nearly double the number of containers brought from Asia into the ports of Long Beach and Los Angeles during September and October, the peak Holiday season for port traffic.

Officials at the Port of Los Angeles, who sent Marketing Manager Christopher Chase to the August meeting, confirmed that Wal- Mart informed logistics people that its container traffic would increase 83 percent above normal levels to about 45,000 FEUs (fortyfoot- equivalent-unit containers) in September and another 45,000 FEUs in October.

Port of Los Angeles executives said they have made a few contingency plans to handle the flow of goods. “Off-hour gates will be coordinated to handle the heaviest times,” said Port of Los Angeles spokeswoman Rachel Campbell.

Starting in November, the ports will move cargo on nights and weekends to ease trucking traffic.

Port of Long Beach officials said they would do what they can to accommodate the influx of containers but did not list specifics.

“I don’t think it is a question of ’can we,’” said Port of Long Beach spokesman Art Wong. “We will just have to do it.”

The Journal of Commerce, a daily newspaper tracking the shipping industry, reported that Wal-Mart was planning to push most of its goods through the ports in September and October instead of spreading out shipments between August and November.

But Wal-Mart officials denied those plans, saying the company’s growth is responsible for an increase in container traffic during the two months. “We are increasing our traffic but only to the degree you would expect because we are a bigger company than we were last year,” said Wal-Mart spokesman Bill Wertz.

He noted that Wal-Mart, based in Bentonville, Ark., typically adds about 200 to 300 stores a year. The company currently has 1,387 stores, 1,615 Supercenters and 542 Sam’s Clubs in the United States, making it a powerful force at the ports that line the West Coast.

Wal-Mart’s Holiday push also will result in a shortage of cargo space on vessels sailing from Asia in October. In addition, the influx of containers is leading to longer lag times in unloading cargo, a dearth of truck drivers to transport goods, and fewer railroad cars available to transport other companies’ freight to the Midwest and East Coast.

“I see this being a very congested shipping season,” said Ernie Stein, vice president of operations at Norman Krieger Inc., a Los Angeles customs broker and freight forwarder. “We all know the shipping lines will be more receptive to Wal-Mart’s cargo because they are the biggest customer.... The railroads are continuing to have problems in moving all the cargo needed. And domestic trucking is at a premium because truckloads going east are getting top dollar.”

Port problems

Because of the labor shortage, vessels are backing up beyond the breakwater as they wait for empty berths at the two ports, where container traffic has increased 15 percent to 20 percent over last year.

As of Sept. 23, there were more than 70 vessels at the two ports, and about one-third were at anchor. Normally during the top shipping season, there are about 15 ships at anchor. “I compare it to a stopped-up drain,” said Manny Aschemeyer, executive director of the Marine Exchange of Southern California, which controls ship traffic at the two ports.

The drain started clogging at the end of June, when many retailers decided to bring their Back-to-School goods in earlier than normal and there were not enough longshore workers to unload the goods in a timely manner.

To alleviate the labor-shortage problem, the International Longshore and Warehouse Union announced in early July it would hire 3,000 casual laborers to work with the 3,800 casual workers currently at the ports.

To date, the ILWU has only hired about 350 to 400 of those workers. It will take another three to four months to hire the rest, said Dave Arian, president of the ILWU, Local 13, whose 5,500 members unload containers at both ports.

Truckers too

A shortage of longshore workers is not the only thing complicating issues at the ports. There is also a scarcity of truck drivers. With laborers taking more time to unload containers, truckers are waiting longer to pick up loads.

“It’s the worst,” said Stephanie Williams, senior vice president of the California Trucking Association, based in Sacramento, Calif. “A lot of the drivers are walking away from the ports.”

About 99 percent of the truckers who ferry cargo in and out of the ports are independent operators. Many of them have grown weary of waiting up to four to six hours to pick up containers and transport them to the warehouses and distribution centers in Southern California.

Railroads off track

Labor conditions are not any better at the Union Pacific Corp. and The Burlington Northern and Santa Fe Railway Co., the two railroads that transport containers in and out of the two ports.

A retooled retirement plan in 2002 lowered the eligible retirement age for railroad workers with 30 years of service from 62 to 60, leading to an exodus of experienced workers from the two companies.

This year, Union Pacific said it is planning to hire 5,000 workers, and Burlington Northern said it is hoping to employ 2,300 transportation employees. But it takes months to train new workers.

In addition, railroad freight volume is up 9.4 percent over last year, said Tom White, spokesman for the Association of American Railroads.

“The 10 busiest weeks in history for intermodal rail traffic occurred this year,” White said. “And we haven’t even gotten into the peak season, which starts now.”