California Apparel News

California apparel manufacturers who have shifted their production to China are worried that when quotas disappear on Jan. 1, it will be nearly impossible to obtain cargo space on vessels sailing from China.

Many fear that Wal-Mart Stores Inc. and other mega-retailers will hog most of the containers bound for the Los Angeles– Long Beach port complex as they bring in stock that normally would have been imported earlier.

“Wal-Mart is taking up all the space in January. They are jumping on the bandwagon assuming there will be no quotas,” said Dean Wiener, chief operating officer of Great Escape and Stony Apparel Corp., sister companies that make childrenswear and juniors apparel. “I’m putting my goods in Sri Lanka and India to diversify myself as much as possible because I think January is going to be a mess.”

Wiener has good reasons to worry. He is responsible for importing 2 million garments a month for the companies, whose headquarters are located in a boxy building in the Boyle Heights neighborhood near downtown Los Angeles. Fifty percent of the companies’ production is done in Asia, and 50 percent is done in Mexico and California. Any delayed shipments can lead to retailers canceling their orders.

The elimination of apparel quotas for the 148 World Trade Organization members is a good news/bad news scenario. But in this case, the bad news may come first if clothing makers are not prepared. Wal-Mart officials, however, said they are not doing anything differently in early 2005 than they did early this year.

Paul Davril Inc., a 30-year-old Los Angeles company that started as a shirt manufacturer and quickly expanded into overseas production, has been planning for months to import much of the Kenneth Cole and Eckored labels the company is licensed to produce.

“I started personally working on this three months ago,” said John Clark, executive vice president of production and import administration. “One thing you have to do is be important to your carrier so they guarantee to have space for you. I have commitments to get our goods on the vessels.”

But in some cases, Clark is not waiting until Jan. 1 to bring in his Spring items. For his Kenneth Cole men’s line and the Eckored line, merchandise will start arriving in early December, and the company’s first Spring deliveries will go out on Dec. 20. The Kenneth Cole women’s line will be shipped in January in space already promised by steamship companies.

Clark has been in constant contact with Davril’s sister company in Hong Kong, Damrak Ltd., to monitor the situation. “Some of the comments I am hearing is that there is at least 90 days of freight that people will want to plow out of Hong Kong during the first week of January,” he noted.

Shipping lines, however, have not announced their January sailing schedules yet, said Robert Krieger, president of Norman Krieger Inc., a Los Angeles customs broker and freight forwarder. But that has not kept big customers from getting commitments for space.

“Whatever Wal-Mart wants, Wal-Mart gets,” Krieger said. “We know that [congestion] is not just going to be out of China but out of other areas where people are waiting to ship their goods after Jan. 1 so they don’t have to pay quota.”

Quotas on items such as synthetic goods can add 30 percent to the cost of a garment.

Perfect storm

This will only add to problems at the Los Angeles–Long Beach port complex, where traffic has been at some of its highest levels in recent years. As of Oct. 19, there were 94 vessels at the twin ports, the third-largest complex in the world, with 35 of those anchored beyond the breakwater waiting for docking space.

Normally, congestion at the ports would ease by early November, when most Holiday goods have arrived by sea. But as the United States becomes increasingly dependent on imported goods and commodities, there is not expected to be a lull in port traffic. This is despite the fact that Jim McKenna, president of the Pacific Maritime Association, which represents shipping companies and terminal operators, predicted that port conditions will improve in six to eight weeks.

By that time, it is expected that 3,000 casual dock laborers will have been hired, trained and sent to work. By January or February, another 2,000 casual workers will be trained and on the job. But they cannot be relied on to report to work every day because many have other full-time jobs. Also, there is still a shortage of railroad workers and trains as well as truck drivers to transfer goods to warehouses.

In addition, a plan to extend port-terminal gate hours to nights and weekends, which had been scheduled to go into effect Nov. 1, will not be implemented until the first quarter of 2005 because terminal operators said they do not have the manpower yet to work nights. The extended hours will give truckers more time to pick up cargo containers and ease port congestion. Currently, truckers are waiting two to four hours to pick up containers, said Stephanie Williams, executive vice president of the California Trucking Association.

This does not bode well for early next year. During the two-week Chinese New Year celebration, which begins on Feb. 9, many Chinese companies will shut down.

Labor laments

On Oct. 20, International Longshore and Warehouse Union officials held a teleconference outlining their solutions to alleviate the port congestion in Los Angeles, Long Beach and Oakland, Calif.

“One solution is we recommend reorganizing the casual workers with workers of the rest of the industry and give them benefits so they become part of the industry. So once we train them, we can hang on to them,” said ILWU President James Spinosa.

Other suggestions included organizing container gangs the night before to be dispatched early the next day instead of having scores of workers crowding into the dispatch halls to get assignments.

Currently, the terminal operators and the union are discussing how many workers should be on a gang. Terminal operators want to see 11 to 13 members on a gang. The union had wanted one additional person but is now willing to alter that, said Dave Arian, president of the ILWU, Local 13, which works at the Long Beach and Los Angeles ports.

The union is also pushing to have terminal gates open round-the-clock as soon as possible. It would also like to see a staging area inside the terminal gates where truckers could quickly drop off and pick up containers.

Air America

To bypass the port congestion, some companies are planning to air freight their goods early next year.

Victor Kim, co-owner of Cherish International in Los Angeles, which makes some of its cashmere sweaters in China, has been in touch with several Chinese factories to check their plans for next year. “I am planning to import high-end sweaters from China and Bangladesh, but I don’t think I will ship by ocean. I will ship by air,” he said.

Because cashmere is a lightweight fabric, Kim expects shipping by air will only add about $1 to each garment. “Even if it is $2, I would rather ship by air because then I can keep my promise of on-time delivery.”

Air freight is a common practice for Los Angeles manufacturers such as Sue Wong, maker of ornately beaded dresses and sophisticated daywear. Nearly 100 percent of Wong’s labor-intensive production is now done in China.

“Normally, we air freight at the beginning of the year because of Chinese New Year,” said Josh Homann, chief operating officer at Sue Wong. “It takes about 60 to 90 days to produce one of our garments. For Spring, the season is February, March and April deliveries. So for the first two deliveries, we don’t have time to ship by sea.”

Air freight prices add $3 to $4 per garment, he said. But this is added into the $149 to $359 wholesale price for evening dresses and the $89 to $149 wholesale tag for daywear.