Geo. S. Bush & Co., Inc. Email Alert October 2002

…What Should We Expect Now?

West Coast Ports reopened late last week under federal order as President Bush invoked Taft-Hartley, requiring the PMA and ILWU to return to work for an eighty-day “cooling-off period”.

Geo. S. Bush & Co. would like to take this opportunity to provide insight as to what we are experiencing and what we anticipate throughout the next eighty days.

Current Port Conditions:

• The congestion is real and delays commonplace.
• Some vessels are waiting days after berthing just to get labor assigned for discharging.
• Equipment is in short supply and the ability to turn equipment timely is difficult.
• Full recovery to normal operations is estimated at four to ten weeks.
• Congestion and equipment demand are increasing costs.

ü Container dray companies may invoice additional wait-time starting at their arrival to the line entering the port facility.

ü Carriers may apply different criteria for assessing demurrage, free time, etc.

• Export cargo will begin to move more timely throughout this week but will still face problems.
• Carriers are claiming Force Majeure and additional costs may be applied for getting import containers to their final destination.
• Intermodal congestion continues as rail service once again begins to feed containers to and from ports.

Factors Impacting Recovery

• Port throughput is suspect and estimated at 75% of normal level.
• The volume of vessels anchored offshore awaiting berthing remains high.
• Carrier vessel rotations and ports of call are being adjusted to expedite their return to Asia.
• Cargo is off-loaded, in many instances, at the port of first arrival.
• The Customs entry process may require entries to be amended or possibly filed at a different customs port to accommodate cargo discharge and the in-bond transfer process.
• Export cargo: We anticipate the backlog to be cleared more quickly as vessel capacity and utilization is more abundant for West bound movement. Problems will persist, however:

o Export bookings are two to three weeks out with vague ETD’s and cutoff times.

• Both empty containers and chassis will continue to be scarce in the coming weeks.
• Import cargo: We anticipate vessels will operate at maximum capacity.

ü Carrier allocation of space is ambiguous.

ü Anticipate preferential treatment for larger shippers.

ü Some vessels have over 200% demand for slots on East bound lanes.

ü Smaller and medium shippers face delays at origin due to limited space availability.

ü Anticipate substantial rate increase for East bound cargo through carrier implemented Contingency Surcharges.

Trans-Pacific Trade, The Next Eighty Days

• Taft-Hartley will expire on December 27, 2002
• NLRB will present the ILWU with the last proposal made by the PMA for a secret ILWU vote.
• After eighty days, should no resolution be reached, President Bush will make recommendations to congress.
• Long-term prognosis for a PMA and ILWU resolution is ambiguous and the probability is high that no resolution will be in place at the expiration of Taft-Hartley.

We are doing everything necessary to make sure your cargo is moved as quickly and as cost effectively as possible. As the situation is very fluid, we will make every attempt to update you with any and all developments. If you have any questions, please contact your Geo. S. Bush & Co., Inc. representative.

Best regards,

Geo. S. Bush & Co., Inc.