West Coast Strike Could Impact Supply Chain Nationally

As The ADVANTAGE goes to press, concern about the expiration of the labor contract between the Pacific Maritime Association (PMA) and the International Long shore and Warehouse Union (ILWU) which ends at midnight June 30th mounts. At this time, it is unknown if a renewed agreement will be reached by July 1st. While both sides state that work will continue during negotiations, labor experts indicate that shutdowns or lockouts may occur. In 2002, stalled negotiations resulted in a 10 day labor lock out, effectively shutting down west coast ports in the United States.

Members should carefully monitor the situation and consider bringing in additional inventory in case a work stoppage does occur. Because some shippers are already diverting to east coast ports, congestion and potential delays could occur there also. According to the ILWU “It is likely there will be some disruption, but how much is very hard to predict.” In the event of a shutdown, shippers who . . . use west coast ports will be forced to divert through the Panama Canal, increasing costs and delivery times.

Azher Khan, President of Preferred Supplier, Calderon says “Calderon’s Supply Chain group has been watching this situation for several months and building increased inventories as a hedge against possible slowdowns or shutdowns at Pacific ports. Options are very limited once a labor stoppage is enacted.

Although the majority of Calderon products arrive via east coast ports, all US ports would be impacted in a relatively short timeframe if western ports are idled. It is estimated that each day of stoppage at the western ports could result in up to one week of container delivery backlog. As a result, shippers would shift volume to east coast and gulf coast ports through the Panama Canal, creating backlogs there as well and dramatically increasing their shipping costs. As always, in the event of any supply constraints, Calderon’s first priority will be the continued supply of goods to existing customers.”