Dock Slowdowns Last Year Cost Washington $770 Million
Based on analytic modeling, the reduction in cargo handling productivity in the state of Washington between October 2014 and March 2015 resulted in total near-term losses of $769.5 million to Washington businesses. This value represents the sum of net delinquent shipments and additional costs, specifically warehousing and truck idling fees.
A report prepared for the Washington Council on International Trade estimates $555.8 million in exports were not shipped via waterborne containers during the period of the port delays.
Some of these exports were shipped via other modes, notably airfreight. Washington businesses increased their shipments of exports by airfreight by an estimated $152.6 million during the slowdown, and at more expensive fees – upwards of 10 times waterborne shipping costs. This resulted in a net loss by value of export shipments – the value of goods not exported during the slowdown period – of $403.2 million.
Delayed or delinquent delivery of imported goods through Washington ports destined for Washington businesses summed to an estimated $345.1 million. Impacted businesses included retailers, through reduction in inventory, and manufacturers, among other industries, according to the report.
The slowdown cost growers/packers/shippers, as apples were being dumped each day, truckload by truckload, to rot in the hot sun. Part of the problem is the state had a gigantic crop to market in 2015.
Last May, Washington State Tree Fruit Association President Jon DeVaney blamed the port slowdown on the numerous truckloads of apples being dumped.
“Washington growers and shippers typically export a third of the state’s apple crop, and the slowdowns curtailed our ability to access these customers for about four months – or one-third of the year,” he said at the time. “Moreover, this occurred during what are typically peak shipping months to these export markets and in a year when we had a record-size apple crop.”
Shippers incurred additional costs, including demurrage fees (i.e., warehousing and storage costs for containers due to delays charged by the terminal operator), which summed to an estimated $7.0 million, and truck idling costs of $14.2 million. The report summarizes these estimates.
The report’s authors say it is important to emphasize the above findings represent only the short-term costs Washington businesses incurred due to the delays. Future costs, such as damaged client relations resulting in the loss of business or sole-source contracts, can have long-lasting impacts on Washington businesses. While these impacts are not quantified in this report, they are real and potentially much greater than the near-term costs presented above. Stakeholder feedback was solicited to help understand these impacts.