The Economic Costs of the 2014-2015 West Coast Port Slowdown on Washington State

The Washington Council on International Trade (WCIT) requested an analysis of the economic impacts and costs of the recent West Coast ports slowdown on Washington state businesses.

This report provides an assessment of those costs, both in total and by select industries and scenarios.

Analysis draws from a variety of data sources and methodologies, including waterborne containerized exports and imports data, statistical modeling, news sources, and interviews with local businesses, ports, and industry and commodity associations.

Quantifying Impacts
Based on analytic modeling, the reduction in cargo handling productivity 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.

An estimated $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 ten 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 (delayed delivery of components), among other industries.

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. Exhibit E-1 summarizes these estimates.

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.