Frustrations Mount Amid Port Slowdowns

Lockout Could Cost U.S. Economy $1B Per Day

Port SlowdownNearly 200 business groups aligned with retailers and manufacturers are denouncing the ongoing contract stalemate between West Coast dockworkers and terminal operators, with the latest salvo fired in a biting joint letter sent last Friday. The groups contend – and recent Federal Reserve data confirms – that the six-month standoff is hurting businesses by slowing the flow of imports and exports.

“The stakes are extremely high and the uncertainty at the West Coast ports is causing great reputational and economic harm to our nation,” the groups wrote. “Some jobs have and will continue to be lost as a result of continued delays at the ports. Policymakers in Washington, D.C. cannot solve the myriad of issues surrounding these talks, but the competitive marketplace will respond if you continue on this current path.”

One likely market response would be the diversion of more and more shipments to East Coast ports, something importers have already begun doing in certain cases. If companies simply wait on shipments to get through clogged ports, the entire supply chain is affected and goods reach customers later. Major retailers including Ann Taylor, the Loft, Lane Bryant and Justice all have recently acknowledged product delays caused by the West Coast dispute.

At odds in the contract impasse are the Pacific Maritime Association (PMA), which represents shipping companies, and the International Longshore and Warehouse Union (ILWU), which represents 20,000 dockworkers at West Coast ports. Both sides agreed to federal mediation that began earlier this month, but negotiations have not led to a deal. Talks have appeared to be sour for weeks as the PMA has accused the ILWU of strategically creating slowdowns to get negotiating leverage.

“Despite our sense of urgency in resolving the contract talks and getting our ports moving again, the union’s slowdowns continue and the resulting operational environment is no longer sustainable,” the PMA said in a statement. In response, ILWU spokesman Craig Merrilees cited conditions, not tactics, as the reason for the traffic. “The port congestion crisis is a long-term problem that pre-dated allegations of a slowdown – and will unfortunately continue after a settlement is reached,” he said.

Nearly 50% of all U.S. containerized freight is handled at West Coast ports. An eventual lockout or strike could cost the U.S. economy $1 billion per day, according to some estimates.