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West Coast port shutdown threatens economic shock wave

​West Coast port shutdown threatens economic shock wave

Another blow to shippers as four-day partial shutdown of 29 ports on the West Coast continues

West Coast ports remain on virtual shut-down today as an escalating labor dispute forces shipping lines and terminal operators to suspend loading and unloading of cargo ships. Following a year of chronic delays that left lines of vessels waiting as long as a week to berth at the ports of Los Angeles and Long Beach, an extended closure threatens to send painful ripples through the U.S. economy.

“The situation is forcing companies to reevaluate their distribution networks and implement port diversification strategies so they don’t get caught with all their eggs in one basket."

Rich Thompson, JLL’s global head of Supply Chain Consulting

According to Fortune magazine, retail and manufacturing groups project that a full, extended shutdown of the ports could cost the U.S. economy $2 billion a day. That’s because the LA and Long Beach ports are the country’s busiest, handling a combined 50 percent of all U.S. container freight and more than 70 percent of Asian imports.

“The situation is forcing companies to reevaluate their distribution networks and implement port diversification strategies so they don’t get caught with all their eggs in one basket,” says Rich Thompson, JLL’s global head of Supply Chain Consulting.

Thompson also notes a rise in cargo volumes at East Coast ports, which gained nearly 20 percent in market share last year at the expense of the West Coast. “We expect some of this had to do with risk mitigation in advance of the labor contract negotiations,” he says.

He says there has also been a spike in demand for warehouses close to the ports. And this, he predicts will cause rents to rise in already desirable locations close to large populations.