Free Trade Zones

Shippers avoid Port of Oakland as trucker protests halt trade

Protests by truckers at the Port of Oakland have halted the flow of trade for at least two days and some ships are now weighing anchor for another port or jumping port. In an effort to restore production, the port has established ‘free speech zones’ which were described in an open letter to the trucking community last night.

Truckers have been protesting California’s labor law since Monday. This law classifies workers as employees rather than independent contractors. Truckers 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 approximately 70,000 truckers, which represents two-thirds of port truckers in California,” Everstream Analytics told clients.

Truckers sit on 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 told CNBC that 450 ILWU workers were sent to the terminals over the past three days but were unable to work due to protests from truckers.

“Every day, ILWU workers get up at 5 a.m. to go to the shipping hall and take up shifts at the port,” said ILWU Local 10 President Farless Dailey III.But when they arrive at the terminals, protests by truckers are creating conditions that make it unsafe for workers to walk through the gates and do their jobs. »

The ILWU has dispatched 450 workers over the past three days who have been unable to enter to move goods. “They don’t get paid when they don’t come in,” Dailey said. “ILWU workers want to work and move goods, as we do every day, even during the worst days of the pandemic. We are for AB5, not against it. But we are not going to put our members at risk to cross 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 on the CNBC supply chain heatmap.

“Currently, import containers sit at the Port of Oakland for over two weeks,” said Josh Brazil, vice president of supply chain insights at Project44. “Due to a lack of intermodal capacity, dwell times were over 10 days even before the AB5 protest. These containers will now spend even longer in port due to restrictions on independent truckers,” he said. .

The volume of containers waiting to enter the port at anchor has tripled, according to congestion tracking by MarineTraffic. This expectation forces some ocean carriers to weigh anchor and leave.

“We are already seeing ships skipping Oakland. Comparing ship schedules a week ago to today, expected arrivals through the end of August have already dropped 16%,” said Alex Charvalias, Supply Chain Transit Visibility Manager at MarineTraffic. One example is the Maersk Altair, which skipped Oakland after waiting about three days off the coast, and said it’s now heading to Long Beach.

The shutdown also impacted loaded US exports. The Port of Oakland, which is a major export port for U.S. agriculture, has had a history in recent months of being bypassed by shipping carriers due to congestion. Shipping carriers were trying to make up for lost time waiting for the Port of Los Angeles or the Port of Long Beach.

According to CNBC’s supply chain heatmap, ships awaiting unloading at the Port of Los Angeles are waiting longer due to growing container congestion. This port has a land capacity of 90% with more than 60% of its containers destined for rail.

The ports of LA and Long Beach have been battling increased rail container congestion for months. Port officials asked BNSF and UP for more equipment to move containers out. The wait for a rail container to the port of LA is approximately seven days; Port of Long Beach is nine days away.

Ship congestion on the east coast

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 Savannah carrying a combined total volume of 311,300 TEUs (twenty foot equivalent),” Charvalias said. “That’s over half a month’s volume of what Savanah handles.”

Rerouting ships to the nearby port of Charleston may not solve the problem, as congestion will build there as well.

“It just creates a ping-pong congestion effect that further disrupts already strained ground operations. It can take months to clear the backlog,” he said.

Covid cases and trucking in China

CNBC’s supply chain heatmap for China shows mass testing in northern China, reported by CNBC earlier this week, is impacting the movement of trucks to ports in Qingdao and Tianjin.

EverStream Analytics noted that Tianjin’s top exports include smartphones and semiconductor chips and components.

Extreme heat in Europe adds to port pressures

Extreme heat in Europe is impacting water levels in major commercial waterways, slowing the movement of essential goods.

“Inland waterways are the hardest hit,” said Andreas Braun, director of ocean products for Europe, Middle East and Africa for Crane Worldwide Logistics. “This affects bulk transport more, but we have also seen some container barge operators, especially on the Rhine, having to reduce their maximum payload capacity.”

Braun said grains like wheat, fertilizers, coal and animal feed products are transported by bulk ships.

Grain prices have already been affected by Russia’s war against Ukraine. This congestion will only add further pressure.

The heat wave compounds the problems that logistics managers are trying to cope with. The latest European supply chain heatmap shows the challenges in a sea of ​​red.

Congestion at German ports that has been hit by labor strikes shows no signs of easing. Waiting times for ships are increasing and containers are piling up as the rails get crowded. It also creates a rumble in the attempt to retrieve empty containers from the hinterland. The slowdown reduced loaded exports to the United States by two and a half months. Some of Germany’s top exports are automobiles and auto parts.

“The situation of ships awaiting arrival and unloading is becoming increasingly stressful,” Braun said. “The lack of availability of empty equipment in the hinterland will put additional pressure on empty containers returning to Asia due to being filled with exports. Congestion is slowing ships returning to China.”

The decrease in the number of empty containers is something logistics managers are watching closely. A smaller pool of containers could fuel prices if there is more demand than supply.

The CNBC Supply Chain Heat Map data providers are the global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; the logistics provider OL USA; the FreightWaves supply chain intelligence platform; the Blume Global supply chain platform; third-party logistics provider Orient Star Group; the marine analysis company MarineTraffic; marine visibility data company Project44; shipping data company MDS Transmodal UK; ocean and air freight benchmarking and analytics company Xeneta; leading supplier to research and analytics company Sea-Intelligence ApS; Crane Worldwide Logistics, air and freight logistics provider SEKO Logistics and EverStream Analytics.