Volume 2, Issue 9 - May 15th, 2014

Port labor and capacity issues threaten to create a miserable summer for importers.

The biggest immediate concern is the June 30 expiration of the ILWU contract covering the West Coast ports from San Diego to Seattle.

“While shippers would obviously prefer an early resolution, knowledgeable insiders say a more likely scenario calls for talks to continue past the deadline, not necessarily triggering an immediate labor situation, but prolonging the uncertainty well into peak season,” said Larry Gross, a consultant with the FTR consulting firm.

Others predict West Coast ports will experience a series of slowdowns as ILWU negotiations continue beyond the June 30 deadline, into the start of the holiday peak shipping season in July.

According to the National Retail Federation, the major West Coast ports handled 11.2 million cargo containers in 2013, representing 69% of the total at U.S. retail container imports.

More than 60 shipper groups urged negotiators to reach agreement quickly. NRF noted that retailers have already begun to develop alternative plans to ensure the proper flow of holiday merchandise.

“NRF’s members, as well as other stakeholders, have already begun contingency planning to ensure their cargo does not get caught in potential disruptions,” NRF President Matthew Shay said.

He said that port disruptions “add costly delays to our members’ supply chains and other industries relying on U.S. West Coast ports, and it likely further threatens the fragile economic recovery.”

Adding to importers’ woes are attempts to disrupt port operations by a Teamsters attempt to have friendly state officials reclassify drayage drivers as employees instead of independent contractors.

Fueling the gate delays and the cartage drivers’ frustrations is worsening chassis unavailability as ocean carriers exit the business. Congestion in LA/Long Beach stemming from shipment growth also is exacerbated by the complexity of the new, evolving chassis supply model, Gross pointed out.