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A rush of cargo is expected to hit West Coast ports in May and June as shippers try to avoid any labor problems that might arise when the longshore workers contract expires July 1.

“We expect peaks in late May and June to avoid the labor negotiations,” said Cas Pouderoyen, senior vice president at DHL Global Forwarding.

As a backup measure, shippers are also testing the waters at ports not affected by the contract, remembering the 2002 labor dispute, when there was a 10-day lockout at West Coast ports keeping 10,500 laborers from working in late September and early October. The lockout created a huge backlog of cargo headed for store shelves during the crucial holiday season.

Home Depot Inc., which brings in 25 percent of its goods through the ports of Los Angeles and Long Beach, is doing a test run in Mexico at the Port of Laacute;zaro Caacute;rdenas on the Pacific Ocean, according to one source. And Epson Inc. is dipping its toe into the waters at the Port of Vancouver in Canada.

Others are opting for all-water routes from Asia to the East Coast via the Panama Canal. “We are seeing more people sail to the East Coast from Asia,” said Stephen Ng, a senior vice president at shipping line OOCL Inc.

The shipping community is holding its breath, hoping to avoid a labor dispute on the waterfront this year. Signs point in a positive direction.

Negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association, representing shipping lines and terminal operators, were expected to start in mid-March, said ILWU spokesperson Craig Merrilees. In years past, they have started in May.

Many feel the union doesn’t have as much negotiating leverage this time around. Cargo container imports were relatively flat at the West Coast ports last year and aren’t expected to grow above 2 percent this year. Consequently, many longshore laborers are not working as many hours as before. Others are being forced to sign on for late-night and early-morning shifts to earn enough money.

Labor negotiations are just one of the issues affecting the shipping community this year, as discussed at the eighth annual Trans-Pacific Maritime Conference, organized by the Journal of Commerce March 3–4 in Long Beach, Calif. It was attended by more than 1,450 people.

Shipping rates and fuel costs were other hot topics. Normally, lower cargo traffic to West Coast ports would mean lower shipping rates for importers. But the big shipping lines have diverted many of their vessels to the more-robust Asia-to-Europe route, where cargo traffic increased 12 percent last year.

“Maersk has taken off 30 percent of its capacity [on the trans-Pacific route] and deployed it to other more-profitable routes,” said Nils Andersen, group chief executive of A.P. Moller-Maersk, the world’s largest container shipping line. “These actions, which are quite unique to the market, where capacity has grown over the years, will change the dynamic situation of supply and demand.” While shipping rates were flat last year, some are predicting they may inch up by as much as 5 percent this year.

However, hefty fuel surcharges are being felt across the industry. Last May, bunker fuel cost $360 a metric ton. That rose to $495 this year. In order to save fuel, ships sailing across the Pacific Ocean have been “slow steaming,’ or reducing their speed by at least one knot an hour, to reduce fuel consumption by 3 percent.

“Our bunker fuel prices have tripled over the last three years and now are 50 percent of our cost of operating a vessel, up from 20 percent 10 years ago,” Andersen observed.

Also, railroads and trucking companies transporting containers inland have hiked their fuel surcharge fees to the shipping lines by 20 percent to 28 percent, industry experts said. High railroad costs resulted in one U.S. marine terminal operator losing a decades-old customer to Canada, where rail costs are less than in the United States.

“One of our major clients in Seattle, whose shipments we had handled for 29 years, said they were sorry but they were going to Prince Rupert,” said Ed Nike, president of SSA Containers and SSA Marine. “We lost 100,000 containers [a year].”

Other issues affecting the shipping community included:

bull; Outsourcing bust: Many believe that double-digit growth in container shipments on the trans-Pacific route is a thing of the past. Economists predict that the United States’ outsourcing trend has peaked. However, Europe and Asia are catching up with the U.S. model and probably will be producing more goods in Chinese factories.

bull; Rising exports: The weak dollar, which has fallen hard in the last few years, has meant that U.S. exports are booming. U.S. exports were up 16.2 percent in 2007.

bull; Transportation Worker Identification Credential: All workers who have unescorted access within port gates must have a government-issued TWIC card this year. It was predicted that the TWIC program would go into effect Sept. 1 at the Southern California ports. But the Transportation Security Administration and the U.S. Coast Guard, which are administering the program, underestimated the numbers of workers who would need a card. Initially it was thought they would have to process 750,000 individuals who need background checks, but the real number is almost double that.

As of Feb. 27, only 190,000 workers were pre-enrolled in the TWIC program, and 120,000 had actually been enrolled. Many believe TWIC won’t be up and running until next year. Furthermore, it is estimated that as many as 3,000 of the 16,800 local drivers picking up cargo at the ports of Los Angeles and Long Beach won’t qualify for a TWIC card, leading to a driver shortage.

bull; Clean trucks: The Port of Long Beach and the Port of Los Angeles still remain far apart in how they are going to administer the Clean Air Truck Program. The Port of Long Beach agreed to allow independent operators to pick up cargo if they have clean trucks. The Port of Los Angeles has been tilting toward allowing only trucking company drivers to pick up cargo. American Trucking Associations is threatening a lawsuit if Los Angeles goes with the full-time employee program.