The Effect of Port Disruptions on US Economy (Part Two)
Posted on Thursday, July 23rd
Port disruptions have proved to have a massive impact on the economy of the United States on countless occasions, causing drops in the production rates, the employment ones and cargo losses as well. Moreover, they tend to leave shippers with very few options as far as keeping foreign customers close is concerned.
Depending on the size of their business, shippers can switch from air freight transportation to ocean freight transportation. As expected, this option tends to prove lucrative only in the case of large shippers for they can stand up to the financial challenges it involves. Indeed, the conflicts between the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union (ILWU) have caused significant increases in the shipping costs, thus impairing the activity of many US shippers. In fact, many have been forced to shut down as a result of these cost fluctuations.
Cargo redirection
The solutions available for US exporters as far as keeping foreign customers close goes also include cargo redirection, among others. More specifically, US exporters can choose to stick to ocean freight transportation for exporting purposes but find alternative solutions as far as the shipping routes and transit ports are concerned. At the other end, importers tend to adopt this strategy too if their financial status allows it. As expected, cargo redirection also involves greater costs than traditional shipping solutions, thus forcing exporters and importers alike to make some financial effort. However, the additional investment is bound to be recovered should this business solution be handled wisely.
Cargo redirection can provide a solution to shipping various products from the West Coast to the East Coast and to the Asian continent therefrom over longer distances. However, it should be noted that there are a few limitations with this solution for the ports along the East Coast cannot absorb the entire cargo volume shipped through those along the West Coast.
Rerouting cargo as a shipping solution expands to ports outside of the US territory as well. More specifically, a large part of the cargo shipped from the ports along the West Coast goes through ports in Mexico and Canada. Of course, this transition is bound to affect the US economy, causing financial and job losses, but at the same time it is highly advantageous for numerous shippers in the United States from a fiscal point of view.
Unfortunately, unreliability has proved to be one of the top problems in the shipping industry at present, the incessant conflicts between the Pacific Maritime Association and the International Longshore & Warehouse Union often causing irreversible damage. A closer look at the activity of West Coast ports will confirm it. However, the conflicts between the two authority bodies are far from over, so US exporters are bound to keep struggling for quite a while longer on account of the existing disagreements with regard to the ways in which the activity of ports should be managed and the employment problems resulting from their impaired activity.
