Leadership void adds to tension at trio of major ports

In keeping with a trend established at the dawn of the container age, inbound shipments dipped substantially following Chinese New Year.

Overall February volumes at the Port of Los Angeles decreased 8.9 percent compared to February 2013 due in part to the Lunar New Year celebrations which closed many factories in Asia for two to three weeks last month. Shippers will no doubt recall that in 2013, the holiday had a negative impact on March container volumes.

Import volume the Port of Long Beach, meanwhile, was down 2.7 percent, while exports were up 2.1 percent in February, compared to the same month last year. Overall cargo volume fell 2.6 percent due to an 8.3 percent decline in empty containers.

But while the slump in activity is seasonally predictable, shippers are concerned about another major development: the leadership void. The Port of Los Angeles lost its executive director – Geraldine Katz – when a new mayor was elected. And the Port of Long Beach lost its chief – Chris Lytle – when he took a better offer at the Port of Oakland.

Both major ocean cargo gateways have an executive search underway, and now the Port of Seattle has begun one of its own in anticipation of Tay Yoshitani’s departure. This veteran port director announced his resignation late last year, leaving a lasting and enviable legacy.

Lack of leadership comes at a time when forces are converging to make the West Coast less attractive to ocean carriers.

Case in point: the Port of Vancouver. This huge Canadian player – the largest in the nation – suffered a crippling strike staged by truckers last month.

Almost 2,000 truckers – both union and independent – stopped working to protest of long lines and wait times, and other “unfair” practices at the port. The strike began Feb. 26. The event had a devastating impact on the economy with only about 15% of the normal container traffic being moved by motor carrier, thereby causing supply chain disruptions for retailers across British Columbia and in the rest of Canada dependent on Pacific Rim logistics.

A strike similar to this one can occur at any time in the U.S., but what really has shippers concerned are the pending negotiations with dockside labor.

With the current Longshore and Clerks’ Contract expiring just three months from now on midnight of June 30th, The International Longshore and Warehouse Union (ILWU) is gearing up for a major fight.

ILWU International President Bob McEllrath has told members to “hold the line,” and encouraged them to propose strategies to address the challenges ahead, including:

• Jurisdiction – efforts by the employers and other unions to “poach” Longshore jobs.
• Health Care & Pensions – increased employer & government pressure to cut benefits.
• Automation – employer efforts to replace workers with new technology.

Add to this miasma, the fact that West Coast ports are being threatened by the Panama Canal expansion. East Coast and Gulf ports are aggressively wooing beneficial cargo owners to advise carriers on deployment alternatives when the project is completed in 2015.

These developments lead one to beg the question: who would want to be an executive director of a West Cost port?

One might argue that it’s time for these bureaucracies to begin to take a creative path toward evaluation of leadership. In the private sector, logistics managers are often drawn out of the world of finance, research, or human resources. Placed in a new position of authority, many of them thrive while altering the company culture with innovation and vision that had not been considered before.

There’s certainly no dearth of candidates on the Pacific Rim capable of embracing such risk. It’s up to the ports to find the right horse and ride out the wager.