Depending on the state’s location, a winter storm bringing freezing rain, sleet, ice and snow has closed roads and—essentially—halted the flow of goods across much of the Southern, Eastern and Northeastern U.S. Soon enough though, the storm will ease and roads will reopen.
Goods stuck in Western states are another story. Roughly 20,000 dockworkers have been working without a contract, and recent back-to-back weekend port shutdowns have already had an impact on many companies that rely on goods traveling to and from Asia. To make matters worse, an end to the dispute doesn’t seem to be in sight.
The consequences of the labor dispute between dockworkers and the operators of the port terminals and shipping lines have played out for months primarily at the Los Angeles and Long Beach ports, which are estimated to account for roughly 40 percent of the nation’s incoming container cargo. The worth of the goods moving through the ports each day is estimated to be $1 billion. However, there actually are 29 West Coast ports involved in the dispute.
The weekend port shutdowns are significant. For example, on Saturday, 32 ships were anchored outside the ports of Los Angeles and Long Beach. They were “unable to unload thousands of cargo containers filled with auto parts, electronics and clothes,” an article in the Los Angeles Times reports.
One of the consequences is that Honda, on Sunday, said it would slow production in manufacturing plants in Canada and the U.S. due to part shortages caused by slowdowns at the West Coast ports, Reuters reports.
“We don’t have a sufficient supply of several critical parts to keep the production lines running smoothly and efficiently,” Honda spokesman Mark Morrison told Reuters.
The issue is a dispute between the Pacific Maritime Association and the International Longshore and Warehouse Union, which dates back to May 2014, when negotiations on a new contract began. The dockworkers have been working without a contract since July, and after nine months of port labor negotiations, the two sides remain gridlocked over rules on the removal of arbitrators who settle disputes on the dock. Since then, both parties have laid blame on each other for the ports’ congestion, slowdowns and work stoppages.
The concern among manufacturers, logistics companies, retailers, farmers and politicians is that the slowdown will be detrimental to businesses in the South, and there will then be a ripple effect across the country. Hardest hit so far, are companies which aren’t prepared for the potential supply chain disruptions that may affect their bottom line if they have difficulty getting raw materials or finished products through the ports. A complete shutdown then would potentially have a significant and long-lasting impact on the U.S. economy.
Given the situation, it really wasn’t a surprise that President Obama dispatched Labor Secretary Thomas Perez to San Francisco last Saturday to try and help jump-start stalled labor negotiations. Perez was scheduled to meet with both sides today in hopes of brokering a deal.
What are your thoughts on the back-to-back weekend port shutdowns? Has your company seen an impact because goods are not unloaded from cargo ships as planned?