Sea shipping slowdown
JEFF SELLE/jselle@cdapress.com | Hagadone News Network | UPDATED 10 years, 3 months AGO
COEUR d'ALENE - An ongoing labor dispute in West Coast ports is slowing imports and exports, and local businesses are starting to feel the impact.
The International Longshore and Warehouse Union has been in negotiations with the Pacific Maritime Association for a new labor contract since May, but so far they have failed to reach an agreement.
As a result, the PMA claims the ILWU is intentionally slowing the flow of cargo moving through the ports of Seattle, Tacoma, Long Beach and Los Angeles.
"The ILWU instituted a slowdown by 30 to 50 percent on Oct. 31," said Steve Getzug, a spokesman for the PMA. "It really creates pressure on the shippers. Agricultural companies are having trouble getting their apples and potatoes out of the country."
Getzug said major retailers anticipated the slowdown based on past union practices and ordered their goods for the holiday season before the slowdown started, but impacts may begin appearing at that level as products begin to sell out before Christmas.
Locally, some retailers are starting to see the impacts already.
Bing Sherwood, sales manager for Koerner Furniture, said the store's having some trouble importing furniture.
"For the furniture we are getting overseas, it is hard to get a definitive date for delivery," he said. "Maybe this is a good reason for buying American-made furniture."
He said the slowdown is also causing an escalation in shipping costs, amounting to $150 per truckload and $1,500 per shipping container.
But retailers aren't the only ones feeling the affects, said Ron Nilson, CEO of Ground Force Worldwide.
"They are just harming their customers like us," Nilson said. "I think it is just criminal what they are doing."
Nilson said he shipped an underground motorgrader to Guatemala recently and it took two weeks longer than it should have.
"That was a $500,000 invoice, so yes, I would say this is impacting us," he said, adding 75 percent of his business is exported.
"I have a friend who is expecting a shipment from China and it's been sitting on a ship offshore for two weeks now," Nilson said. "They are hurting their customers downstream."
National Retail Federation Vice President for Supply Chain and Customs Policy Jonathan Gold said most major retailers started bringing in their holiday merchandise in April, and some are seeking other ports on the East Coast and the Gulf of Mexico.
"But not all of that can come from the alternative ports," he said. "We are still hearing from some people who are having trouble getting their cargo out of the ports."
Gold said the average time of getting a container out of the ports is two to three days, and now it is taking seven to 10 days and sometimes longer to get their goods.
Some of the larger retailers are reporting to investors that the slowdown has taken a toll on their bottom line, Gold added.
He said nobody knows the status of the negotiations because the PMA and ILWU instituted a media blackout in September. Prior to that, Gold said, they issued a release saying they were close to an agreement.
"That's when the congestion issues started right at the peak of the season," he said, adding the NRF recently joined 110 other trade associations in asking the Obama administration to encourage the parties to seek federal mediation.
"We saw this same thing happen on the East Coast ports in 2012, and a took a federal mediator to negotiate a settlement," he said. "The problem is the administration can't step in unless the parties ask them to, and they have not been willing to do that yet."
Gold said his federation is anticipating a 4.1 percent increase in holiday sales over last year, and he hopes the congestion issues do not impact that number.
"We hear there are some retailers looking at air freight to move their last-minute items," he said. "But that is eight times the cost of water transportation."
Getzug said the PMA has been meeting all week with the ILWU to reach a tentative agreement because it has been working without a contract since July 1 and that is causing some problems in the negotiations.
"Without a contract we have no way to adjudicate our disputes," he said, adding he hopes they can reach a tentative agreement soon.
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