A little more than two weeks ago, West Coast dockworkers showed their strength by stopping work for eight hours to protest the war in Iraq.
For many, the situation provided a flashback to 2002, when more than 200 freighters sat idle from San Diego to Seattle after a labor dispute led to a 10-day lockout. The cost of suddenly choking off main entry points into the United States for Asian imports was estimated in the billions of dollars, as auto plants closed for lack of parts and stores couldn't get holiday wares.
East Coast ports benefitted greatly from the logistical knot, particularly Hampton Roads and Savannah, Ga., as importers diversified their cargo routes in ensuing years. Now, with the 6-year-old West Coast longshoremen contract expiring again July 1, the maritime industry is wondering whether history will repeat itself.
Another 2002 is not predicted this year by industry watchers. "We're expecting smooth negotiations," said J. Craig Shearman, the vice president of government affairs with the National Retail Federation, a Washington-based trade group.
Several factors are different this year, Shearman said. There's more competition for imports, with beefed-up port facilities on the East Coast and a new West Coast port in the Canadian city of Prince Rupert. There's also less cargo to move with the slowdown in the economy.
Also looming is the roughly $5.3 billion expansion of the Panama Canal that's under way. When it comes on line - scheduled for 2014 - it will make it easier for big ships to sail from Asia to the East Coast.
"With all of those factors in play, both labor and management realize that it's important to keep the jobs that they have and to keep working, rather than to try to push the envelope this year," Shearman said. "They also realize that the West Coast very soon won't be the only game in town any more."
While import volumes likely will remain strong through western ports, there was a 2 percent shift in container market share to the East Coast between 2006 and 2007, said Paul Bingham, a principal in the global trade and transportation practice of Global Insight Inc., an economic forecasting firm.
He predicts an additional 1.2 percent swing eastward through September.
"The volume shift seems gradual, but it's been real," Bingham said.
So far this year, Virginia International Terminals Inc., which runs the three state-owned marine terminals in Hampton Roads, has not encountered an influx in cargo that normally flows through the West Coast, said Joseph A. Dorto, VIT's chief executive officer. With the sluggish economy, he hasn't seen much business from anywhere over the last few months, Dorto said.
Labor issues are less contentious on the East Coast, Dorto said, in part because there's more eastern ports competing for cargo. Out west, the adjoining ports of Los Angeles and Long Beach dominate, Dorto said.
Unionized port workers along the Atlantic, including Hampton Roads, are represented by the International Longshoremen's Association, or ILA, rather than the West Coast's International Longshore and Warehouse Union. The ILA's labor contract expires in September 2010.
Speaking last week at a maritime conference in Norfolk, Richard P. Hughes Jr., the ILA's president, said his 65,000-member union "would take no pleasure in gaining any advantage as a result of problems on the West Coast." He also emphasized the ILA's history of stability, saying it has been decades since there was a major strike along the Atlantic and Gulf coasts that it represents.
Dorto said other factors pushing ships to eastern docks include the high cost of moving freight by rail from western ports across the country and the increasing cost and congestion of using West Coast ports. For instance, the port commissions in Los Angeles and Long Beach recently approved a new container fee to help pay for a modern fleet of cleaner-burning trucks at the ports.
The high cost of fuel, though, is working against eastern ports because of the extra distance ships must travel to reach them, Dorto said. Shipping lines, looking to trim ever-rising fuel costs, have cut about three of the Asian ship services calling Hampton Roads for that reason, he said.
Norfolk Southern Corp. is seeing the movement of ships eastward. In 2000, 20 percent of the Norfolk-based railroad's international container traffic came through the East Coast, and 80 percent moved via western ports, said Wick Moorman, Norfolk Southern's chairman and CEO. In the first quarter of this year, more than 50 percent of that cargo came through Atlantic ports.
"We don't think that's a trend that's going to stop," Moorman said. "That's a very significant shift in the way the world is moving."
Gregory Richards, (757) 446-2599, gregory.richards@pilotonline.com