West Coast Port Contract Negotiations Resume, But is it Too Late to Help Holiday Shipments?

Contract talks between West Coast port union workers and terminal operators were set to resume earlier this week, following a nearly month-long slowdown in port activity in Washington, Oregon and elsewhere in the region.

Port workers from the International Longshoreman and Warehouse Union have been working without a contract since July 1, when their previous contract expired. The Pacific Maritime Association manages the West Coast ports, and talks to create a new contract with ILWU have either been fruitless or non-existent.

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Wade Gates of the PMA told MyNorthwest.com both sides will “get back to the table” this week and talk about the big issues holding up the contract deal.

Activity at the ports has taken a dive in recent weeks, and both sides have blamed the other for the slowdown. PMA points to disgruntled union workers for shipping disruptions, while the ILWU says things like larger ships clogging the docks and a shortage of trailer chassis are causing congestion at the ports.

"It's a much more complex and difficult problem than just scapegoating workers," Craig Merrilees, spokesman for the ILWU in San Francisco, told MyNorthwest.com.

Though, there seems to be more optimism from both sides in this week’s negotiations than before. Merrilees told the source “talks have continued to be positive and profess has been made.” While Gates added “everyone is focused on getting back to negotiations.”

Holiday Delays

The fact that this port crisis has come at this time of year perhaps is putting even more pressure on workers and terminal operators to come to a contract agreement. Retailers, shippers and other businesses have been expressing concerns over how the situation at West Coast ports will impact holiday orders and shipments. (We wrote about this recently – check it out here).

However, new reports may put those fears to rest. The majority of holiday products are either already at distribution centers waiting to be delivered to consumers or are already on store shelves, The Associated Press reported this week. So, it seems likely most holiday presents will make it under the Christmas tree this year.

There is no doubt, however, the port slowdowns are having an impact on the supply chain. Sure, businesses may have stocked shelves and warehouses now, but what if that inventory runs out in the next month, and goods for January and beyond are still sitting on a shipping container at a West Coast port?

Brian Jablon, executive vice president of the Los Angeles-based business Stansport Inc., which sells camping equipment, told the AP he was worried if stores would be able to stock shelves with products after the holiday season is over. Already, Jablon said he is unable to fulfill an order from a major retailer because the products are “on the water somewhere,” yet to be unpacked and delivered.

Non-Holiday Items Experience Delivery Delays

Some products that are not necessarily on the top of everyone’s gift wish are experiencing delivery delays due to port slowdowns. The food industry, specifically, seems to be taking a hit. For example, the Washington apple industry is not able to deliver orders abroad to places like Asia and the Caribbean due to the West Coast port situation. Jon DeVaney, president of the Washington State Tree Fruit Association, told the AP the Washington apple industry is loosing tens of millions of dollars a week in sales as port contract negotiations stall.

“There’s an immediate negative impact on returns to growers and the industry as a whole,” he said. “A number of firms (packer-shipper-marketers) have laid off 100 to 200 people or reduced hours because they’re not moving inventory at the rate they planned to … It hurts and continues to hurt. We need to find a solution. It’s having a huge impact.”

Long-term Impacts, Lost Business

Even if current contract negotiations prove to be positive this week and the PMA and the ILWU come to an agreement, businesses will likely feel the affects of the port activity slowdown for many more months. Shippers say the damage has already been done, and are expecting a multi-month backlog once port productivity returns to normal.

Blaine Calaway, vice president of China sales for Calaway Trading Inc., told the Puget Sound Business Journal if port activity ramps up as earlier as next week, his business will still be 2 or 3 months behind on fulfilling current contracts.

Another scenario is those contracts will be canceled due to ongoing delays and companies will lose business. Bob Ashumn from the National Frozen Foods Corporation said he is afraid of just that – customers canceling orders and finding other suppliers. He told the Business Journal his company sends products to Japan, but those customers can source the same products from other suppliers in Thailand, Australia or New Zealand if delays on the West Coast continue.

Make sure to check back on Spend Matters for updates on the current West Coast port situation.

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