Retailers and other shippers could react to a brewing dockside labor dispute with the potential to shut down container terminals this fall by building up import inventories to ensure they have enough product on hand, a logistics industry official said Wednesday.
Most speculation about the standoff between the International Longshoremen's Association and companies that operate marine terminals on the East and Gulf coasts has centered on the possibility that shippers may re-route cargo to the West Coast to keep store shelves stocked and production lines humming. The current contract between the ILA and the U.S. Maritime Alliance expires at the end of September and both sides have accused the other of not negotiating in good faith. ILA leadership has drawn a line in the sand over automated cargo handling replacing any dock workers. It also insists that the ILA continue to maintain and repair chassis even as ocean carriers put the equipment in pools or turn it over to third-party managers, and that marine companies do a better job of monitoring overweight containers for safety and royalty reasons.
Another option being considered by some importers is to order shipments earlier than normal, especially for sales, seasonal and popular merchandise, and store them in warehouses as insurance in case ocean transportation gets disrupted, Ronald M. Marotta, vice president of origin cargo management for Yusen Logistics (Americas), said during a panel discussion hosted by the Council of Supply Chain Management Professionals, in conjunction with the release of an annual report on logistics trends.
"People are trying to plan as best they can for all contingencies" to protect their companies, he said.
BNSF Railway is already thinking ahead after a number of customers inquired whether the western railroad could handle a larger amount of cargo from Asia if all-water service to the East Coast was cut off, John Lanigan, the company's chief marketing officer, said.
"It's part of what we're building into our contingency planning for the third and fourth quarters," he said.
Limited Brands, the parent of Victoria Secret and five other fashion and personal care outlets, is considering moving imports through West Coast ports or using airfreight if there is a strike or lockout, Rick Jackson, executive vice president of Mast Global Logistics, said. He did not give a deadline for when the company would begin shifting freight from normal trade lanes.
Mast is Limited Brands' in-house sourcing and logistics arm.
Talks between ILA and USMX leaders are scheduled to resume in two weeks - Eric Kulisch