A sudden announcement of a possible U.S.-China trade deal has led to high levels of anticipation and concern over the impact on industrial supply chains, including food and apparel goods. Undoubtedly, disruption will occur somewhere along the chain but what can importers do to mitigate the risk?
The “ilwu contract expiration 2022” is a report that U.S. importers are trying to ship around potential labor disruption.
Importers in the United States are already resetting their supply chains to minimize interruptions ahead of possibly tense contract discussions between West Coast dockworkers and the corporations that handle the flow of commodities through ports this summer.
According to logistics providers, some shippers are pushing Christmas orders ahead to get them into domestic networks sooner, and many are diverting goods that would ordinarily travel via the West Coast to East Coast and Gulf Coast ports. That, according to shipping officials, is helping to spread congestion at California’s ports of Los Angeles and Long Beach, highlighting the challenge importers have in reorganizing supply networks constructed around the main West Coast gateways.
“There are few choices available,” said Sidney Brown, CEO of NFI Industries Inc., a third-party logistics provider located in Camden, N.J. “That’s why a lot of them still pray and hope they can get a lot of their cargo through L.A.-Long Beach.”
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Top news and in-depth analysis on everything from supply chain to transportation and technology in the field of logistics.
Labor discussions on the West Coast, which would affect 22,400 dockworkers at 29 ports from Washington to Southern California, are anticipated to commence in the coming months, but no specific date has been scheduled. The parties will try to replace an agreement that will expire on July 1st. In previous years, labor negotiations took months to conclude. Slowdowns at ports caused long delays in ships off the coast of Southern California during heated discussions that lasted from 2014 to 2015.
“It has our attention,” said Jon Cargill, senior vice president and chief financial officer of Hobby Lobby Stores Inc. “We are examining the effect it might have on our supply chain.”
The discussions will take place this year at a time when dozens of ships are already stranded in the Pacific Ocean due to pandemic-related supply-chain constraints. Attempts to bypass the bottleneck by diverting goods elsewhere have resulted in backlogs from the Gulf of Mexico’s Port of Houston to the ports of Savannah, Georgia, and Charleston, South Carolina.
Some shippers agreed to contracts earlier than usual in the annual shipping cycle this year to ensure space on alternate routes, according to David Arsenault, president of GSC Logistics Inc., a third-party services company that specializes in moving cargo through Northern California and the Pacific Northwest.
Mr. Arsenault believes that other gateways would struggle to process much of the cargo from the ports of Los Angeles and Long Beach, which together handle about 40% of U.S. container imports.
At the Port of Los Angeles, a worker inspects a semi-truck chassis.
Patrick T. Fallon/Bloomberg News photo
“Big retailers realized there was a limit to how much East Coast capacity they could get, and that if they waited too long, that space may already be taken,” he added.
Small and medium-sized importers, who prefer to book cargo on short-term contracts rather than long-term contracts, say they have contingency plans in place but will wait to see how severe any interruption is.
Caraway Home Inc., a nearly three-year-old kitchenware manufacturer, is contemplating shifting freight from California to the Port of New York and New Jersey, as well as to Prince Rupert, a port in British Columbia, Canada, with train links to Chicago, according to Mark Riskowitz, head of operations.
Roel Dekkers, director of supply chain at Premium Guard Inc., an aftermarket automobile filtration provider, said he is contemplating sending time-critical cargo to East Coast ports while sending less time-sensitive shipments to the West Coast.
Container volumes via East Coast ports have been expanding faster than those through West Coast ports in recent months, however it’s unclear how much of the difference is due to congestion slowing volume processing at California gateways and how much is due to cargo being redirected to other ports.
From the Logistics Report:
According to the Pacific Merchant Shipping Association, overall imports into major West Coast ports fell 14% in December compared to the previous year, while East Coast volumes jumped almost 13% and Gulf Coast imports increased nearly 14%.
The National Retail Federation asked the dockworkers union and port terminal employers to start discussions as soon as possible to assuage shipper worries in February. The two sides have a lot to talk about, from West Coast labor restrictions to more complicated problems like automation, wages, and benefits.
The Pacific Maritime Association, which represents terminal businesses, said on Wednesday that it is ready to start talks right now. It won’t be ready until May, according to the International Longshore and Warehouse Union, which represents dockworkers.
Shippers do not anticipate the negotiations to end before the contract expires, according to Jonathan Gold, vice president of supply chain at the retail federation. They would, however, prefer to have assurances from both parties that there would be no disturbance.
“Many shippers are looking for that type of signal,” he added, “and they haven’t seen it yet.”
Paul Berger can be reached at [email protected]
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The “ilwu negotiation” is a term that refers to the potential labor disruption that could occur during the holiday season. U.S. importers are trying to ship around this potential issue by negotiating with their suppliers and shipping companies as soon as possible.
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