Port Talks Stall, Slowdown Looms

Friday, September 6, 2002

Talks between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) stalled just before the recent Labor Day holiday weekend, with ILWU negotiators walking out of talks with shipping lines. As a result, the labor contract between the two groups, which had been extended since July 1, has expired, meaning that work slowdowns at California’s 29 ports could begin soon.

Work at the ports will continue in the short term thanks to an ILWU regulation that requires members’ votes before striking. Ballots have been mailed and work will continue for two weeks after the walkout.

Robert Krieger, president of Norman Krieger Inc., a Los Angeles-based customs brokerage firm and international freight forwarder, has been fielding questions from clients and making recommendations in the event of a strike.

“I would advise people to go to temple on Friday and to church on Sunday and say an extra prayer for a settlement,” said Krieger. “I would also tell them to reroute their freight in the event of a strike.”

How manufacturers and retailers should reroute that freight will depend on where those goods are heading, Krieger said.

For example, Krieger advised a client from Hong Kong who ships to the East Coast to reroute the freight to New York via the Panama Canal or the Suez Canal. Regarding that case, Krieger noted, “This client is a garment customer and the merchandise is mostly heading to New York. They would normally use the West Coast as their gateway, so there will be delays from Hong Kong.”

For imported goods heading to the western region of the country, Krieger recommended shipping to Vancouver, Canada, or Ensenada, Mexico, using the Suez Canal to one of those ports, or using air freight to ship the goods.

But each alternative has its drawbacks, Krieger said. For instance, using optional waterways not only takes longer, but if the merchandise has been placed on the boat and the strike is called off, there is no way to get the cargo off the boat to mitigate the delay.

Using air freight is also problematic. “Air freight space was tight anyway and it has just gotten tighter,” said Krieger. “Demand for air space was high due to supplychain issues of orders being placed late and certain merchandise being produced untimely. Cargo is not going to go by air freight as fast as everyone would like it.”

Ilse Metchek, executive director of the California Fashion Association, said that there is no concrete advice to give her members just yet since there is no way to know what is going to occur.

If the workers agree to strike, retailers stand to suffer the most, according to Metchek, who noted that nearly 70 percent of the apparel sold in Los Angeles comes from offshore.

And, she added, a strike could have a long-term impact on Southern California’s two ports.

“The downside is that we could lose our prominence as the biggest port of the Pacific Rim, since collectively, the ports of L.A. and Long Beach make the largest facility,” she said.