Protests by truckers at the Port of Oakland have halted the flow of trade for at least two days, and some ships are now pulling anchor to go to another port or skip port. In an effort to restore production, the port has established “free speech zones” that were described in an open letter to the trucking community last night.
Truckers have been protesting California’s gig labor law since Monday. This law classifies workers as employees rather than independent contractors. Truckers who are classified as independent owners and operators were protected from the law for a two-year statutory stay, but after the Supreme Court decided not to hear the case, that protection was lifted.
“Strikers say the bill’s classification requirements are unreasonable and will negatively impact about 70,000 truckers, which represent two-thirds of port truckers in California,” Everstream Analytics explained to clients.
Truck drivers sit at a barricade as they block the entrance to a container terminal at the Port of Oakland on July 21, 2022 in Oakland, California.
Justin Sullivan | Getty Images
The International Longshore and Warehouse Union tells CNBC that 450 ILWU workers have been sent to the terminals in the past three days, but were unable to work due to trucker protests.
“Every day, ILWU workers get up at 5 a.m. to drive to the dispatch room and take jobs at the port,” said ILWU Local 10 President Farless Dailey III. “But when they get to the terminals, the trucker protests are creating conditions that make it unsafe for workers to walk through the doors and do our jobs.”
The ILWU sent 450 workers in the last three days who couldn’t get in to move cargo. “They don’t get paid when they don’t come in,” Dailey said. “ILWU workers want to work and move freight, just like we do every day even during the worst days of the pandemic. We’re for AB5, not against it. But we won’t put our members in harm’s way to pass by the line of truckers,” he added.
The impact of this labor shortage can be seen in both import container wait times and ships waiting at anchor in CNBC’s supply chain heat map.
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“Import containers are currently sitting at the Port of Oakland for over two weeks,” said Josh Brazil, Project44’s vice president of supply chain information. “Due to a lack of intermodal capacity, dwell times exceeded 10 days even before the AB5 protest. Now these containers will spend even longer at the port due to restrictions against independent truckers “, he said.
The amount of container volume waiting to enter port at anchor has tripled, according to MarineTraffic’s congestion tracking. This wait has some ocean carriers now raising anchor and leaving.
“We’re already seeing ships skipping Oakland. Comparing ship schedules a week ago to today, expected arrivals through the end of August are already down 16 percent,” said Alex Charvalias, transit visibility manager for the supply chain at MarineTraffic. One example is the Maersk Altair, which skipped Oakland after waiting roughly three days offshore, and said it is now headed to Long Beach.
The shutdown has also affected loaded US exports. The Port of Oakland, which is a major export port for US agriculture, has had a history in recent months of being bypassed by ocean carriers due to congestion. Ocean carriers were trying to make up for the time they lost waiting for the Port of Los Angeles or the Port of Long Beach.
According to CNBC’s Supply Chain Heat Map, ships waiting to unload at the Port of Los Angeles are waiting longer due to growing container congestion. This port has 90% land capacity and more than 60% of its containers are destined for the railway.
Both the L.A. and Long Beach ports have been battling increased rail container congestion for months. Port officials have asked BNSF and UP for more equipment to remove the containers. The wait for a container by rail for the Port of LA is about seven days; Port of Long Beach is nine days away.
East Coast Ship Congestion
The diversion of trade from west coast ports to the east coast continues and as a result an increase in the number of ships at anchor.
“You have 36 container ships waiting outside of Savannah carrying a total combined volume of 311,300 TEU (twenty-foot equivalent unit),” Charvalias said. “That’s more than half a month’s worth of what Savanah handles.”
Diverting ships to the neighboring port of Charleston may not solve the problem because congestion will build up there as well.
“It just creates a ping-pong congestion effect that further disrupts already strained ground operations. It may take months to clear the backlog,” he said.
Covid cases in China and trucks
CNBC’s supply chain heatmap for China shows that massive testing in northern China, reported by CNBC earlier this week, is affecting truck movement at the ports of Qingdao and Tianjin.
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EverStream Analytics noted that Tianjin’s top exports include smartphones and semiconductor chips and components.
Extreme heat in Europe increases pressures on ports
Extreme heat in Europe is affecting water levels in key trade waterways slowing the movement of critical commodities.
“Inland waterways are being hit the hardest,” said Andreas Braun, director of ocean products for Europe, the Middle East and Africa at Crane Worldwide Logistics. “This affects bulk shipping the most, but we have also seen some container barge operators, particularly on the Rhine, have to reduce their maximum payload capacity.”
Braun said grains such as wheat, fertilizer, coal and animal feed products are moved by bulk ships.
Grain prices have already been affected as a result of Russia’s war against Ukraine. This congestion will only increase the pressure.
The heat wave exacerbates the problems that logistics managers are trying to solve. The latest European supply chain heat map shows the challenges in a sea of red.
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Congestion at German ports hit by labor strikes shows no signs of easing. Waiting times for ships increase and containers pile up as the rails are congested. This is also creating a bottleneck in trying to retrieve the empty containers inside. The slowdown has supported loaded exports to the United States for two and a half months. Some of Germany’s top exports are automobiles and auto parts.
“The situation for ships waiting to arrive and unload is getting more and more stressed,” Braun said. “The lack of availability of empty equipment inland will increase pressure on empty containers returning to Asia because they will be filled with exports. Congestion is holding back ships returning to China.”
The decrease in the number of empty containers is something that logistics managers are watching closely. A smaller pool of containers could fuel prices if there is more demand than supply.
Data providers for the CNBC Supply Chain Heat Map are global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; logistics provider OL USA; supply chain intelligence platform FreightWaves; Blume Global supply chain platform; third party logistics provider Orient Star Group; marine analytics company MarineTraffic; marine visibility data company Project44; shipping data company MDS Transmodal UK; Xeneta, the ocean and air freight benchmarking and analysis company; leading supplier of research and analysis company Sea-Intelligence ApS; SEKO Logistics and EverStream Analytics.