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Supply chain: Imports shift from West Coast to East Coast amid labor disputes

Yahoo Finance’s Dani Romero joins the Live show to discuss California’s ‘gig economy’ law, labor disputes, supply chain woes, and the outlook for imports.

Video Transcript

[MUSIC PLAYING]

BRAD SMITH: Welcome back, everyone. As the West Coast navigates supply chain woes and backlogs, shippers have been opting to send more freights to East Coast ports. For more on this, let's bring in Yahoo Finance's Dani Romero. Dani, what do we know?

DANI ROMERO: Yeah, so like you said, more shipments are being sent to the East Coast as companies continue to navigate these supply chain pressures. First, you have the ongoing West Coast labor negotiations between the dock workers, as well as the shipping operators. Well, to this day, we have yet to hear anything settled by that.

Even though both parties remain and say that they will avoid disruption, data from Project44 shows that cargo owners are really concerned about the potential disruption if there is no new contract or there is not an extension. New York and Savannah, Georgia are the two major ports on the East Coast, and they've experienced an increase in volume.

I spoke with a representative from the Port Authority of New York and New Jersey, and she tells me that they are handling 33% more containers than pre-pandemic levels. And not only that, but the port also has noticed that 16.5%, they've experienced an 11.5% in growth of imports through May. And they say they are estimating 6.5% of that, it was intended to go to the West Coast.

Now, I did speak with a supply chain expert. And he said to me that in a perspective of a shipper, they're saying that yes, OK, they're shipping to the East Coast. It does take a longer time. But from there, they're able to get it on a train, get it on a truck, and send it to the destination.

JULIE HYMAN: Well, speaking of getting it on a truck and what happens to the stuff that gets shipped once it gets to the actual United States, there is a trucker led blockade in Oakland, California, right?

DANI ROMERO: Yes.

JULIE HYMAN: And I think, what, they're in negotiations with the state, or they want things from the state? Talk us through what's going on out there.

DANI ROMERO: Yeah, so it's another day that these truck drivers are on the picket lines. And of course, they are protesting a California labor state law known as AB5, a gig economy law that was passed in 2019 that makes it harder for companies to make these truck drivers independent contractors. And so, trucking companies, they are in charge of the permits, as well as the insurance that these truck drivers need to get inside these ports. And so-- because AB5 now requires these owner, operators to do that all themselves.

So now these truck drivers are saying, this is a ploy to force us into these companies that will then require us to join a union. So they really just want their right to be able to say, hey, I want to join a union, or I do not. They don't want to be required. So now these truck drivers are really asking Governor Newsom to sit down with them and discuss this issue. And they say that they will be on the picket lines until they hear from Sacramento.

BRAD SMITH: Yahoo Finance's own Dani Romero. Super interesting. We continue to track all of these movements. We appreciate it.