March 3, 2015 Many Shippers to Divert Cargo from West Coast Despite Tentative Agreement Being Reached 3/3/15 Although a tentative agreement was reached between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) for the West Coast ports on February 20th, many shippers will not soon forget the nine months of congestion delays. A recent survey, conducted by the JOC, found that 65% of 138 shippers surveyed said they plan to ship less cargo through U.S. West Coast ports this year and in 2016 after suffering from congestion delays. Of those planning to reroute freight, alternative destinations include: • 22.7% to U.S. Southeast ports • 16.1% to U.S. Northeast ports • 16.1% to U.S. Gulf Coast ports • 14.7% to British Columbia’s Port Metro Vancouver and the port of Prince Rupert • < 1% to Mexican ports • 5.1% Not sure of destination Data from the PIERS Database shows diversion of cargo was already underway in the fourth quarter of last year when the West Coast congestion was at its worst. Fourth-quarter import growth compared to the fourth quarter of 2013 was: • 12.6% on the East Coast • 11.8% on the Gulf Coast • 5.3% on the West Coast Since about 70% of the U.S. population lives east of the Mississippi River, ports on the East and Gulf coasts are logical destinations of cargo diversions from the West Coast. Although the East Coast has had its share of disruptive labor negotiations and weather events in past years, its major issue has always been its ability to handle larger vessels (ships with capacities of more than 10,000 TEUs). East Coast ports are currently spending billions of dollars to develop the infrastructure necessary to handle the larger ships. Most of the ship diversions to the East Coast are currently passing through the Suez Canal, because carriers have deployed ships too large to fit through the Panama Canal’s existing locks. A third set of locks on the Panama Canal, scheduled to be completed in early 2016 will enable vessels of up to 13,000-TEU capacity to transit the canal. Odyssey will continue to monitor all developments and advise you of any actions we recommend for your business. It is essential for businesses to optimize their supply chains to their particular needs, so if you have any questions or concerns when it comes to routing your specific cargoes, please feel free to call.