The historic COVID-19 crisis put US West Coast ports in the spotlight nationally and around the globe in 2020. In early March, the eyes of the world were on the cruise ship Grand Princess, which waited for days for government approval to disembark in Oakland due an outbreak onboard.
The Pacific Maritime Association (PMA) worked swiftly to ensure International Longshore and Warehouse Union (ILWU) members working the ship had complete PPE protection and collaborated with the union to rapidly develop safety protocols that would ensure terminals coast-wide could operate safely going forward. We salute West Coast longshore workers, who are recognized as essential workers by federal and state authorities, as well as our member companies, who have worked cooperatively throughout this challenging period to sustain our economy and ensure Americans continue receiving the vital goods and supplies on which we rely.
COVID-19 has also triggered unprecedented extremes in container volumes. Activity at West Coast ports fell dramatically and blank sailings rose in the spring and summer, a period in which the Pay Guarantee Plan included in the coast-wide PMA–ILWU contract allowed longshore workers to continue drawing pay even when volumes declined.
But as I write this in November, we are witnessing the other end of the spectrum: historic imports. Cargo that had been sitting idle in warehouses and terminals in Asia is now flooding the trade lanes in a spike expected to last through the Lunar New Year.
The perfect storm unleashing this cargo surge is putting stress on all aspects of the supply chain leading up to the holiday period. But we cannot let this temporary spike mask the broader reality. In the long term, the West Coast’s share of discretionary cargo is steadily declining.
In 2020, PMA commissioned several new research studies to quantify market share losses at West Coast ports and identify the core factors driving them. The studies found that materially higher terminal, environmental, and intermodal costs are all factors, exacerbated by the addition of significant new capacity at lower-cost port competitors elsewhere in North America.
Veteran maritime economist John Martin took a closer look at the economic fallout from this alarming trend. He found that a market share loss of just 1 percent of discretionary cargo at the San Pedro Bay Port Complex translates to $15.6 billion in total negative economic impact to California, at least 6,800 lost jobs, and $700 million in lost wages, salaries, and personal consumption annually. These job losses would disproportionately impact off-dock workers, including the trucking industry, distribution centers, warehouses and transload facilities.
Meanwhile, a pair of studies from consulting firm Mercator International also reached troubling conclusions. According to one of the Mercator studies, by 2022, the British Columbia ports of Vancouver and Prince Rupert will be prepared to handle at least 400,000 TEU of additional cargo annually, equivalent to roughly 15 percent of the intact intermodal cargo currently flowing through San Pedro Bay and the Puget Sound. This followed an earlier Mercator study finding that dwindling market share at the Ports of Los Angeles and Long Beach could pose a financial shortfall of well over $1 billion for the Alameda Corridor Transportation Authority in less than 20 years.
In 2021, the PMA looks forward to continuing to work with fellow stakeholders throughout the supply chain and government leadership to tackle the urgent issue of West Coast market share losses. In addition, we expect terminal automation to continue advancing in Southern California and up-skill and re-skill training efforts for ILWU members to take hold. We also anticipate supporting the restart of the West Coast’s cruise industry, which had seen record gains before being sidelined by COVID-19.
History and experience show us that West Coast ports are resilient and strong, with unique natural advantages unlike any other region in the world. Our entire industry stepped up when the COVID-19 crisis hit, and we have the capacity, the technology, the workforce, and the will to continue our national and global leadership in 2021 and for decades to come.