Commentary: Exercising ‘just-in-case’ logistics

   As of mid-August, there has been remarkably little information coming out of talks between the International Longshore and Warehouse Union and Pacific Maritime Administration over a new contract to replace the six-year pact that expired July 1.
   How to pay for the Affordable Care Act’s tax on high-cost healthcare plans has been one topic of discussion, but little else is known about the talks.
   Despite shippers urging an early start, negotiations began in mid-May. PMA officials said past experience showed contract talks have seldom made much progress until a deadline looms, and they predicted negotiations might extend past the contract expiration date, as they did.
   The good news for shippers has been that the ILWU and PMA have been true to their pledge they would “keep cargo moving,” while the contract talks continue.
   That does not mean lack of agreement is going unnoticed.
   “The negotiations appear to be going well but each week that goes by makes the situation more critical as the holiday season approaches,” Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation, said in early August. “Retailers are making sure they are stocked up so shoppers won’t be affected regardless of what happens at the ports.”
   A monthly report on container traffic prepared by Hackett Associates forecast a record 1.54 million TEUs of imports — the highest monthly volume since 2000 — would move through major U.S. container ports in August. Ben Hackett said the increase reflects not only an improved economy, but also the labor negotiations “with importers moving up shipments just in case.”
   And in early August the bond rating agency Fitch said an “ongoing risk of a strike or work slowdown at West Coast ports may already be diverting cargo to other distribution methods and setting the stage for broader economic impacts.”
   If a shift in cargo “were to persist from weeks into months, some shippers may continue to use alternative ports even after the ILWU contract is finalized and the risk of a strike or slowdown has passed,” Fitch said.

This commentary was published in the September 2014 issue of American Shipper.