Tuesday, September 11, 2012

A Striking Possibility:

Shippers, carriers prepare as longshoremen’s contract expiration looms.

International Longshoremen’s Association and management negotiators are running out of time to avert a threatened Maine-to-Texas dock strike that is forcing shippers to scramble for alternatives.

With their coastwide master contract set to expire at midnight on Sept. 30, the ILA and United States Maritime Alliance remain at odds over negotiation of changes to work rules and staffing practices. After a breakdown in talks August 22, the negotiations will resume the week of Sept. 17, less than two weeks before the contract is due to expire.

“A disruption of this magnitude would be devastating to the retail industry and would have severe consequences for the U.S. economy,” said Sandy Kennedy, president of the Retail Industry Leaders Association. “The negative impact a strike would have on retailers and our national economy cannot be overstated.”

As reported here previously, retailers and other shippers have been attempting to move shipments through the ports ahead of a possible strike, stockpiling merchandise, and investigating alternatives including redirecting ocean freight to West Coast ports. But there are few diversion options for trans-Atlantic cargoes.

A potential strike is seen as bad news for shipping lines as well as retailers, and even kids’ Christmas stockings, said Bonnie Chan, an analyst with Macquarie Equities Research. “This would also have wider ramifications for the U.S. and global economy if the strike is prolonged, as retailers would not have enough inventory for the holiday season.”

“Shipping lines highlight that it took them over a month to clear out the congestion when U.S. West Coast ports were shut by strikes for 10 days in 2002,” said Chan. That stoppage was only ended when the Bush administration invoked the Taft-Hartley Act to force an end to the lockout of West Coast dockworkers. The Federal Reserve said that by the 10th day of that stoppage, the economic impact was $2 billion a day.

Considerations for all ocean shippers:
  • Space – vessel space to the West Coast will be at a premium as East Coast shippers shift or attempt to shift.  
  • Additional cost – some lines have already announced “congestion surcharges” in advance of the possible strike.
  • Planning - if importers haven't already put contingency plans in place, they need to do so now.
SPECIAL NOTICE – Inventory Planning Webinar:
Due to strong response to our recent messages on inventory planning, TOTALogistix is following up with a webinar on the topic, conducted by specialists in the field. Mark your calendar for 11 am, Wednesday, Oct. 10th, for insight on this important discipline. For more information and to reserve your spot, send an email to webinar@totalogistix.com.

Kirk Shearer
800-989-0054 x103

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