West Coast Port Negotiations Resume Today – Industries Still Brace for Billion-Dollar Losses

Contract discussions for West Coast port workers were set to begin again today, 9 months from when they first started. The International Longshore and Warehouse Union and the port operator, the Pacific Maritime Association, continue to disagree over contracts. A federal monitor has recently stepped in, in hopes of sparking some sort of settlement.

The West Coast ports shutdown partially over the weekend as well, adding to the cargo backlog already occurring. Specifically, cargo crane operations for loading and unloading freighters had been suspended Saturday and Sunday, but resumed on Monday.

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Though, some fear contract negotiations could lead to a worker strike or total port shutdown. Already, it is taking 2 or 3 times longer than usual to unload shipping containers and clear dockside yards at the 29 ports impacted by the slowdown.

Politicians Weighing in

California Sens. Dianne Feinstein and Barbara Boxer wrote a letter to the workers and operators of West Coast ports urging a resolution.

“Time is absolutely of the essence because significant economic damage has already been done to those people and businesses that rely on the efficient functioning of our ports,” the letter stated. “The economic impact of the increased congestion at the ports is simply unacceptable and unsustainable.”

The goods sitting at the ports reportedly represent 12% of US GDP. But as negotiations drag and productivity slows at the ports, shipping containers sit and wait to be unloaded, delaying deliveries and impacting businesses bottom lines. Nearly 40 ships are sitting idle at 2 California ports alone. Under normal circumstances, ships rarely have to wait at all to make it to bay and be unloaded. According to the senators:

  • 17 ships are anchored, waiting to come to port at Port of Oakland
  • 22 ships sit at the Los Angeles - Long Beach Port Complex

Companies are being forced to look elsewhere to have their ships reach US land.

“Ships have been diverted from California ports in search of more efficient offloading sites. Long term damage to the competitiveness of California ports may have already occurred,” the senators’ letter stated. “These are terrible circumstances.”

Retailers See Billion Dollar Price Tag

Recent analysis suggests congestion at West Coast ports could cost the retail industry $7 billion in 2015. Included in that cost is lost revenue from missed sales as products sit on ships instead of being sold at stores. Also included is the price of having to find alternative shipping methods. Some retailers have already started shipping goods to East Coast ports. Others are purchasing large quantities of products in hopes of avoiding low inventory levels.

Things could get worse, too. If issues at the ports persist to 2016, retailers could be spending $36.9 billion next year more than they did in 2014.

Other Industries Report Losses

According to the American Meat Institute, about $30 million is lost among meat and poultry producers due to the port slowdown. Roughy a quarter of US pork is exported, mainly to Asia.

Produce growers are also disappointed as perishable products sit at ports waiting to be exported to Asian countries. One vegetable grower told USA Today the celery, broccoli and lettuce it sent to China won’t make it in time for the Chinese New Year next week. China accounts for 20% of the company’s production.

Worst-Case Scenario

If negotiations fail to produce any results and a full port shutdown and worker strike occur, it is likely the White House will step in, Chris Christopher, a transportation analyst with IHS Insight, told USA Today. Ports closed for 10 days in 2002, and President George W. Bush invoked the Taft-Hartley labor relations law to get the ports back up and running.

Another 10-day shutdown could come with significant costs. According to the National Retail Federation and the National Association of Manufacturers, a 10-day shutdown at the ports could cost the overall US economy $2.1 billion a day.

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Voices (2)

  1. packIQ:

    What a waste as perishable products sit at ports waiting to be exported. Who’s responsible for the billions of dollars that is being lost from all parties. It’s hard to believe that this situation has not been resolved with such high losses at stake.

  2. MIL-DTL-117:

    This is a terrible situation where all sides are loses. This shutdown comes with comes with significant costs and to the US and other countries as well as long term damage to the competitiveness of California ports. I hope they resolve this soon and also make sure it doesn’t happen in the future.

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