Seattle tells dockers: Go home
By Martin Rushmere
San Francisco
23 February 2009
SOURCE:
http://www.cargonewsasia.com/secured...?article=18494
With horrendous drops in ocean and air cargo shipments thro-ugh US ports and airports, a previously unthinkable strategy is being tried to save money and ride out the worst trade recession in 40 years.
At the same time authorities are trying to soften the effects as much as possible.
On the West Coast, the port of Seattle has been the first to try to stem its tide of red ink that officials say will lead to a US $9 million budget deficit this year.
The port has taken the drastic step of sending workers home. The 800 non-union staff have been ordered to take two weeks unpaid holiday, expected to save $3 million. Another 110 vacant jobs have been frozen, saving $2 million - but which is likely to be offset by $2 million in health-care increases for existing workers.
Container volumes at Seattle dropped by 13.6 percent in 2008, with December notching up a 27 percent slump, while this year the forecast is of another fall of between five and 10 percent. Next door, Tacoma posted a 3.3 percent decline for the year while Oregon's Portland port recorded a six percent volume reduction, with December declining 15 percent.
The real test for Seattle's cost reductions lies ahead - persuading the monolithic dockers' trade union to cut back. Chief executive Tay Yo****ani has asked for union leaders to follow his example, which is likely to lead to silence and then lengthy negotiations before anything is done.
The two biggest ports of Los Angeles and Long Beach have so far kept quiet and observers say the reason is simple - they are very nervous about approaching the dockers and are waiting to see what happens at Seattle. Even if the California ports also put staff on unpaid leave, this will do no more than win a couple of months' grace.
A proposal to offer a $10 per TEU bonus for bringing new business has already been quietly forgotten, because business has slipped so much while other ports have complained.
Officially, Los Angeles expects container volumes to fall about six percent this year, about the same as last year. Analysts, however, are saying that a 10 percent drop in volumes is more likely.
Long Beach suffered an 11 percent year-on-year loss of volume in 2008, which surprised even the most pessimistic forecasters. No predictions are being made about this year.
And it does not get any better. Traders are wincing at the National Retail Fed-eration's forecast of a 12 percent fall in container volumes through all US ports in the first half of this year, year-on-year, - the lowest level in five years. This forecast is much worse than expected just three months ago. February's volumes are expected to be 18 percent worse, year-on-year.
Los Angeles airport, the West Coast's main air hub, suffered an unheard of 14 percent decline in air cargo for 2008 to 1.7 million tonnes. Its woes have been matched to varying degrees all the way through the three West Coast states.
Japan Air Lines is dropping one of its five weekly flights to Los Angeles from March, the second service cut this year. In part, this is due to JAL's own problems, which has led to the seven flights from Narita to New York, one via Chicago, being discontinued. Nippon Cargo has taken some advantage by restoring its direct service to JFK, discontinued last year because of high fuel prices.
Nationally, air cargo in the US fell 17 percent in December on the back of a frightening 30 percent drop in the transpacific market, the worst month ever reported by the International Air Transport Association for any market.
So nervous are the authorities and major traders that such trends are being shoved out of the public eye, to stop any further erosion of consumer confidence.
When the economic devastation is over, now being seen as end-2010 at the earliest, the US will be even more dependant on Asia, especially China.
According to economic and forecasting company PIERS, the transpacific trade will account for 78 percent of imports by 2010, up from 75 percent in 2008. China's share will rise from 64 to 69 percent. For US exports, 60 percent will go to Asia in 2010, from 57 percent last year, while China's share of exports, which fell in 2007, will grow to 39 percent.
At the same time, there will be fewer foreign companies dealing with the US, because so many will be forced out of business, according to business analysis group Panjiva.
The number of companies shipping to US customers shrank 13 percent to 156,000 at the end of 2008 from October 2007. Five percent of that decline came from November to December 2008. Twelve percent of the companies dealing with the US moved 50 percent or less in the fourth quarter of 2008 than they had shipped in the fourth quarter of 2007.
SOURCE:
http://www.cargonewsasia.com/secured...?article=18494