In a nightmare scenario for shippers, forwarders, manufacturers and retailers – but a golden opportunity for charter carriers – the U.S. West Coast port crisis has intensified just before the President’s Day weekend in the United States and a week before the annual factory closures for Chinese New Year, causing many suppliers to scramble for last-minute airfreight space.
To avoid paying holiday wages to dock workers in the International Longshore and Warehouse Union, who continue their work slowdown tactics from the last several months, the Pacific Maritime Association said the 29 ports they represent along the West Coast will halt negotiations and suspend all operations through the holiday weekend. Ports are expected to open again on Tuesday.
With the Chinese New Year beginning on Thursday, February 19, some shippers are paying exorbitant rates to find the limited charter flights available to ship goods out of China. According to Reuters, some Japanese auto manufacturers, such as Honda and Nissan, that rely on seafreight for their just-in-time inventory programs are paying up to $600,000 to charter 747s to deliver critically needed auto parts delivered to U.S. plants. Fuji Heavy Industries Ltd. Said it is burning through an addition al $60 million per month to pay for the scarce airfreight space in order to prevent American factories from shutting down this week.
Integrators, such as DHL, UPS and FedEx, said they are currently scheduling extra capacity for trans-Pacific inbound U.S. cargo volume in preparation for next week’s expected crunch before most Chinese factories close down for the three-week New Year’s holiday celebrations.
Pacific Air Cargo (PAC) said it plans to operate an additional 747 freighter service on its Los Angeles-to-Honolulu route this weekend. According to PAC CEO Beti War, the company may be able to schedule special charter flights to American Samoa and to Guam, if needed.
With the Chinese New Year looming, European logistics firm Norbert Dentressangle said it will be extending its Hong Kong air cargo consolidations to the United Kingdom to three per week. The firm has secured block space time on several airlines for two-day transit between Hong Kong and either Manchester or London’s Heathrow.
The idled West Coast ports handle nearly half of all U.S. maritime trade and more than 70 percent of all Asian imports. The National Retail Federation estimates that an extended shutdown of the ports could cost the U.S. economy approximately $2 billion a day and called for the Obama administration to intervene in the stalled negotiations.