The West Coast port dispute might be over for now, but it’s left a trail of backed up cargo, and more importantly, distrust in the network of Pacific ports that account for more than half of shipments coming into the United States.
Last Friday, port officials and union leaders reached a tentative deal to end a rocky nine-month negotiation process over labor contracts that awaits a final vote of approval by union membership in April.
The good news is that port workers are set to resume their jobs at full speed. But the bad news is that a backlog of stalled shipments could take six weeks to clear, and many retailers have already begun seeking out alternatives.
In a recent poll by shipping news website JOC, 65% of shippers surveyed said they plan to haul less cargo through US West Coast ports in the next two years.
US Secretary of Labor Tom Perez, who flew to San Francisco to help negotiate the recent agreement, said that the biggest factor in ending this dispute was not political weight from the White House, but the risk of retailers taking their business elsewhere.
Perez said that while the West Coast ports have an excellent location, their popularity could be jeopardized if they continue to build a bad reputation for delays and conflict.
He pointed out that as cargo volumes in the Port of Los Angeles were down as much as 27.7% last month, other ports are thriving. The Port of Vancouver, for example, has seen record high shipments this year. Meanwhile, Mexico is considering opening a port with railway links through the Texas border, Panama is expanding the width of its canal, and Nicaragua is building a new canal entirely.
“I spoke to the director of global supply chain management for a very large retailer who will go unnamed, and they said, we will not allow ourselves to be held hostage by this and we’re going to diversify our supply chain.” said Perez.
Although the West Coast ports might have tarnished their reputation with two port shutdowns in the past ten years, they’re still in a uniquely prime location for shipping to and from Asia to the United States. Agricultural producers in particular have little flexibility in how far away they can export produce coming from Northwestern farms. But retailers do have options to the North in Canada and the South in Latin America to reroute their cargo elsewhere. Suppliers should breathe easy knowing that the West Coast drama is over for now, but also make a contingency plan in case another dispute happens.
By Shirin Ghaffary - February 12, 2015
Update 02/13/2014, 2:34 PST: Auto manufacturers Honda and Toyota are adjusting production due to the port strike. Starting Monday, will reduce production at plants. Honda will reduce production at its Ohio, Indiana and Ontario plants while Toyota...Read more
By Shirin Ghaffary - February 17, 2015
West Coast ports reopened today after a five day shutdown, as Labor Secretary Tom Perez meets with representatives in San Francisco to find a long term end to the nine month dispute.
The White House is ramping up its pressure to end the cargo...Read more
By Shirin Ghaffary - February 21, 2015
Both sides involved in the west coast labor dispute reached a tentative deal Friday evening, likely ending a rocky nine-month-long negotiation process that jammed the flow of shipments across the Pacific.
The Associated Press reported that...Read more