West Coast Ports Shutting Down & Transportation Rate Hikes

Feb 12, 2015 – Instability continues to be the theme in ocean transportation. Yesterday’s announcement of the four day West Coast port shut down, and recent confirmation of at least two definite general rate increases (GRI) have shippers scrambling.

How It Affects Your Business

The ripple effect of a bottle neck at USWC ports will flow through your entire supply chain, whether you are a manufacturer or retail vendor. With no sign of things letting up soon, below are some things to keep in mind with how this will affect your business:

Guaranteed GRIs throughout 2015
Possible congestion surcharges at all US ports during 2015
Demurrage/Per diem caused by slowdowns at the ports/chassis shortages
Delayed raw materials for manufacturing will hold up US manufacturers finished goods
Carriers looking to not only increase market rates, but also their BCO contact rates

The Pacific Maritime Association is increasingly putting pressure on the ILWU to move toward a labor deal. Though things may get worse in the short term, an agreement is expected to happen sooner rather than later.

How You Should Handle It

Being proactive in times of unpredictability is key. Here are some tips to help your business weather this storm:

Schedule shipments weeks before you normally would
With spot rates available to some NVOCCs during the year, it can prove beneficial to your business to utilize these rates against your fixed rate contracts
Use caution when signing rates with carriers which appear too good, as we saw in 2014, carriers will not honor these rates when capacity is tight

Have more questions about how your business can respond to these changes? Contact LEGACY today.

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