Cargo movement through ports has been interrupted since the pandemic due to various factors around the world. However, the tide has calmed down over time and sea times and the number of goods transported have begun to improve. So much so that Liborio Cuellar, general manager of the Port Society of Buenaventura, assures that they have managed to get out of the red in sales with a 27% growth.

In an interview with Portafolio, the executive highlighted the importance of increasing dredging in the port, betting on regional roads and implementing the Pacific Train.

Firstly, the union highlighted that 73.9% of the cargo currently transported in Colombia is moved by road. Only 16.9% is done by rail and 6% by cabotage..

The National Logistics Survey reflected in 2023 that logistics costs are close to 17.9% of the value of a product. 35.9% of these costs are transportation, the rest corresponds to storage, inventories and administration costs.

“Therefore, there are many opportunities to improve. In the public policy of the Conpes carried out in 2020 we started with a goal of 12.9% in logistics costs, and the challenge is to reach 9.5% by 2030. But instead of decreasing, in 2022 the indicator rose,” explained Julián Soto, director of Logistics at Analdex.

“The union and the businessmen see that there is much more missing in the Government's policy, which now has the challenge of betting on that intermodality,” he added.

The Analdex expert said that the world is developing towards intermodality and that Colombia has fallen a little behind in that objective. “We started to work on the road issue - which is very good: developing infrastructure, connecting ports with city centers - but we left aside the railroad issue and river areas.”

“Now we see that all countries have advanced, Mexico, which has a railroad issue. The United States too, and we have to work to 2050 on those master plans for mobility and logistics,” he commented.

Inefficiencies in the Colombian logistics sector

Analdex identified some inefficiencies in road transport such as the issue of security and roadblocks, which generate many losses in time and logistics efficiency. "What we are analyzing is that this Government's system of efficient transportation costs limits and does not encourage companies to improve their transportation costs. The Executive must encourage businessmen to be more flexible given the rigidity of this system and given the parameters that exist," Soto concluded.

International trade could face a new global challenge. For this reason, the World Trade Organization and the OECD's goods unit have scheduled constant monitoring of the supply chain. The cause of this concern is the impending strike by major port operators and workers on the US East Coast and the Gulf, which will begin on October 1.

The International Longshoremen's Association, which represents workers at these ports, has warned that its members will go on strike if a labor agreement is not reached before their current contract expires on September 30. The union is demanding a 77% wage increase over a six-year period, while port companies have not yet reached a consensus, which would severely impact major ports such as New York, New Jersey, Savannah (Georgia), Norfolk (Virginia) and Houston. ## Global Impact

This union represents more than 45,000 workers at 12 ports in the US, which could result in a collapse of between 70% and 80% of commercial operations. Javier Díaz, president of Analdex, highlighted that Colombia would be one of the affected countries: “It impacts us, since most of our exports go to the east coast of the United States.”

From a broader economic perspective, it is estimated that the delay caused by a one-week strike could take at least four weeks to resolve, with an estimated cost of between $4.5 and $7.5 billion, according to Grace Zwemmer of Oxford Economics. She expects the situation to normalize once the strike is resolved and the ports can process the accumulated delays.

Lack of Agreement

Negotiations between both parties remain stalled. The union, which seeks increases that in some cases reach 80%, justifies its demands on the benefits obtained by transport companies during the pandemic. Harold Daggett, head of the International Longshoremen’s Association, said that “a sleeping giant is ready to roar on October 1, 2024 if a new contract is not signed.”

Meanwhile, port operators and maritime carriers, represented by the United States Maritime Alliance (USMX), have proposed an “industry-leading” wage increase of about 32%, similar to what West Coast workers received last summer.

However, there is also another sensitive issue under discussion: Daggett is demanding stricter conditions regarding automation, claiming that some companies are using technology that violates the current contract. USMX opposes changing the technology-related language in the current contract, which they see as a concession in a global context where automation is common in the world’s largest facilities.

The impending strike has led to an anticipated surge in the arrival of holiday-season goods at ports. In August, U.S. importers brought in nearly 2.4 million containers, up 21% from the same month a year earlier and the highest level since the pandemic peaks in May 2022, according to the National Retail Federation’s Global Port Tracker.

West Coast ports, which had lost some of their trade during a long period of pandemic congestion, are regaining cargo. In June and July, these ports handled 61% of imports from Asia, the largest share since October 2021. The ports of Los Angeles and Long Beach, California, saw a 47.4% increase in combined inbound container volume in July compared with a year earlier.

The union and management have not yet started negotiations and there are no meetings scheduled. A strike would represent a considerable blow to the U.S. economy, especially just weeks before the presidential election, which could put the Joe Biden administration in a difficult political situation. While the president could invoke a federal law to force longshoremen to return to work, an administration official indicated that Biden is not “considering doing so at this time.”

Concerns in the Agricultural and Auto Sector

Peter Friedmann, executive director of the Agricultural Transportation Coalition, expressed concern: “Calves and hogs continue to grow. Frozen products can be stored in storage, but these fill up quickly. When that happens, ranchers must sell at lower prices on the domestic market.” In addition, a shutdown of operations in the eastern U.S. would mean delays in the arrival of automobile inventories from Europe