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Mar.09, 2015

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4 THE JOURNAL OF COMMERCE Editor's Letter Chris Brooks IT'S TIME FOR the healing to begin, but like a major surgical procedure, this recovery will be neither quick nor painless. The Feb. 20 tentative agreement between the International Long- shore and Warehouse Union and the Pacific Maritime Association brought a measure of labor peace to the U.S. West Coast waterfront. But after nine months of negotiations marked by labor slowdowns, threats of a lock- out and the worst congestion in more than a decade, the scars will be raw for some time. The backlog of cargo on the docks and on ships at anchor in har- bors up and down the coast will last well into the spring — the estimated recovery time for Los Angeles, Long Beach, Oakland, Seattle and Tacoma ranges from six weeks to three months. Then, maybe, the ports will return to some semblance of normal. But what is normal? Certainly, the West Coast congestion resulting from the labor fight has dominated the discussion in the industry and within The Journal of Commerce and since last fall, but it also has served to overshadow a sim- ple fact: Congestion was a problem long before the ILWU-PMA negotia- tions disintegrated. The underlying factors for that congestion — the convergence of huge ships capable of carr ying 10,000 to 13,000 20-foot containers, accelerating economic growth that is generating solid gains in volumes, new and expanding vessel-sharing alliances, productivity that lags world-class standards (or even that of some smaller East Coast ports), and the ongoing transition to new chassis models — aren't going away. One of those wildcards, as it's been for the past several years, is the economy, but the National Retail Federation is forecasting a 4.1 per- cent increase in retail sales for the year. If accurate, it would be the best year for retailers since 2011, when sales increased 5.1 percent. It would also mean a steady f low of retail imports through U.S. ports this year. The question is whether import- ers who diverted goods normally routed through the West Coast to Canada, Mexico or the U.S. East Coast over the past several months will return anytime soon. The last time congestion cut this deep, during the 10-day 2002 lockout of the ILWU in the midst of another bruising contract negotiation, many importers diversi- fied their routing options, and much of that cargo didn't return until, well, East and Gulf Coast ports dealt with their own protracted longshore labor talks in 2012 and early 2013. The lock- out cost the U.S. economy billions of dollars, by most estimates. This time, businesses have lost millions, the result of goods being stranded on ships, stuck in ware - houses waiting to be exported or, in the case of some agricultural goods, rotting on the docks. Some export- ers, unable to fulfill their overseas obligations, say they've lost business to other countries. And that brings us to this week's TPM Conference in Long Beach, where the fallout will be dissected and frustration will be vented. Our hope is that TPM will mark the beginning of the healing, a glimpse of the future and, most important, solutions-based conversation, not only around labor issues, but the congestion problems at large. As Matthew Shay, president of the NRF and who will address TPM on March 2, told The New York Times the day after the ILWU-PMA agreement was reached: "We must dedicate ourselves to finding a new way to ensure that this nightmare scenario is not repeated again." Amen to that, but even with this labor round settled, another poten- tial nightmare is just a cargo surge away. JOC No Calm After the Storm The Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, March 9, 2015, Volume 16, Issue No. 5. The Journal of Commerce is published bi-weekly except the last week in December (printed 26 times per year) by JOC Group Inc. 2 Penn Plaza East, 12th Floor, Newark, N.J. 07105. Subscription price: $344 a year. Periodicals postage paid at Newark, N.J., and additional mailing offices. © All rights reserved. No portion of this publication may be copied or reprinted without written permission from the publisher. POSTMASTER: Please send address changes to The Journal of Commerce, Subscription Services Department, 2 Penn Plaza East, Floor 12, Newark, N.J. 07105-2257. MARCH 9.2015 EXECUTIVE EDITOR, THE JOURNAL OF COMMERCE AND JOC EVENTS Chris Brooks 973.776.7818 MANAGING EDITOR Barbara Wyker 973.776.7817 ASSOCIATE MANAGING EDITOR, JOC.COM Mark Szakonyi, 202.872.1234 SENIOR EDITORS Joseph Bonney, Finance and Economics 973.776.7809 William B. 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