December 10, 2023
On August 31st, an agreement between the International Longshore Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) was made over the longstanding pay dispute that caused significant constraints at the West Coast Ports in the United States.
In a statement issued by the PMA, President and CEO Jim Mckenna commented:
“This contract provides an important framework for the hard work ahead to overcome new competitive challenges and to continue to position the West Coast ports as destinations of choice for shippers worldwide. From San Diego to Bellingham, these ports have long been the primary gateways for cargo coming into and leaving the United States, and our interests are aligned in ensuring they can effectively and efficiently handle the capacity growth that drives economies and jobs.’’
The Port of Los Angeles has always been the nucleus of trade flow from the Asia Pacific to the United States. The top five trading partners include China, Japan, Vietnam, Taiwan, and South Korea. According to its latest published statistics, the North-East Asia trade route accounted for 71% of the cargo handled at the port.
However, due to the Coronavirus pandemic, the Port of Los Angeles experienced heavy congestion due to the surge in shipping volumes, creating a bottleneck for regular trade routes. To counter-act the waiting times to load and unload at the Port, alternative freight solutions were developed to avoid delayed deliveries, reduce costs, and maintain a fluid trade flow into the United States. The East Coast ports benefited from the transition as companies explored alternative routes.
For many companies, this strategy has been ongoing partly due to the Port of Los Angeles turbulence, with strike action prevailing due to the ILWU pay negotiations with the PMA.
With the recent ratification of the new six-year contract agreement, which will improve pay conditions for 22,000 dock workers covering twenty-nine ports stretching from California to Washington State, trade flows could take a U-turn towards the Port of Los Angeles once again.
International trade is also facing additional complications due to the Panama Canal delays. With unprecedented drought conditions, commercial vessels are experiencing another bottleneck as a limited number of ships are permitted to pass through due to water level conditions.
There are many advantages to using Los Angeles as the port of arrival for goods into the United States. Still, the genuine cost advantage for companies will arise from a complete supply chain analysis from Asia origins to final destinations in the United States including trucking/Rail routing across to the East Coast.
The apparel industry is a notable example of how complex international supply chains have become due to economic and political conditions. According to the Port of Los Angeles, apparel was the third largest commodity imported into the West Coast port in 2022, after furniture and automobile parts.
In a recent benchmarking study conducted by the United States Fashion Industry Association (USFIA), respondents cited that Forced Labor conditions and the potential risks in the fashion supply chain rank as the second most serious business concern after the U.S.–China business relationship.
The Uyghur Forced Labor Prevention Act came into force in June 2022, banning all goods from the Xinjiang Uyghur Autonomous Region, responsible for 20% of the world’s cotton production.
The ULFPA and forced labor concerns have spearheaded alternative sourcing for fashion retailers with ongoing shifts to southeastern Asian countries such as Vietnam, Indonesia, Bangladesh, and India.
This shift in textile and fashion sourcing patterns requires a supply chain focus on origin consolidation to maximize shipping cost efficiencies combining shipments from multiple origins in Asia into one logistics hub for the Apparel sector.
In addition, many retail organizations expand their brand lines, regularly purchasing fashion brands that complement their service offering. Brands are purchased under umbrella primary companies; each additional brand line has its supply chain challenges. Consolidating all brands at the origin point in Asia can maximize container usage.
For example, product consolidation at one origin point in Asia when shipping to the United States can provide significant cost advantages in lieu of multiple origin shipping points.
With Los Angeles port back on track after the recent pay negotiations, multiple advantages could provide cost savings to retailers in their overall supply chain planning with an integrated approach, such as:
Please don’t hesitate to contact a Crane Worldwide Logistics representative for further information on our integrated logistics and shipping services from Asia to Los Angeles, we can provide you with a full integrated logistics approach to address your incoming shipments to the United States.
You can also get in touch below and we will have a logistics expert reach out to support you with a tailored supply chain approach to your requirements.