This fall’s West Coast port dispute has made retailers justifiably nervous about whether this supply chain link will hold for the holiday season.
For instance, baseball fans missed out on 57,000 promotional cameras for attendees at the World Series in October. The reason for the PR snafu was the 11-day lockout imposed by the Pacific Maritime Association on the International Longshore and Warehouse Union on Sept. 27. The lockout did more than keep fans from taking snapshots. It halted all West Coast port activity, exacerbated a round of accusations from the two sparring organizations, and raised the specter of massive delays in unloading goods at all West Coast docks during the critical holiday season.
A protracted PMA lockout would inevitably result in store shelves bereft of Rapunzel Barbie® and Chicken Dance Elmo dolls, and shopping aisles filled with frantic parents bemoaning widespread stockouts — not to mention the loss of paychecks for thousands of West Coast port workers. Presumably, nobody desires any of those outcomes.
And yet the war of words has continued. Ports reopened on Oct. 9 under a temporary restraining order issued at the behest of President Bush. Federal judge William H. Alsup converted that order to an 80-day preliminary injunction on Oct. 16 under the provisions of the Taft-Hartley Act. On Oct. 23, the PMA accused the ILWU of engaging in an illegal, “concerted, systematic work slowdown impacting productivity at every major port.” The ILWU pleaded innocent to those charges in an Oct. 24 letter to the Department of Justice.
On Nov. 1, the blame game escalated when the ILWU asked Attorney General John Ashcroft to investigate “apparent collusion between certain officials of the Federal government and officials of various shipping companies and associations,” accusing government officials of meeting secretly with the PMA and other members of the West Coast Waterfront Coalition to plan strategies that would effectively weaken the power of the ILWU in collective bargaining. But at press time, the union was reporting limited progress in negotiations.
Where does all this rhetoric leave retailers? Hanover Park, IL-based educational health care supplier School Health Corp. has felt the effect of the West Coast crisis, “a little bit,” says vice president Rob Rogers. “We ordered some equipment that was coming from overseas, and so it was delayed.”
Kent, WA-based supplier of outdoor gear Recreational Equipment Inc. felt an inventory pinch from the lockout. “We did have a 10-14 day delay in receiving product, which I believe was due to the slowdown. We did receive inventory the week before last [Oct. 20-26] and our inventories are now pretty good,” says spokesperson Randy Hurlow.
Clients of Greenwich, CT-based 3PL company NewRoads foresaw trouble earlier in the year and were able to order extra inventory ahead of time, according to vice president Fred Forsyth. “Any continued conflict might keep some companies from ordering extra to meet high demand,” Forsyth says, but he adds that none of NewRoads’ clients anticipates significant problems.
Redmond, WA-based software titan Microsoft Corp. says it was well prepared for such a problem. According to spokesperson Erica Munson, Microsoft’s global distribution points help insulate it from the effects of the lockout. “There is less impact on Microsoft than on many other Seattle area and West Coast businesses,” Munson says.
Computer giant Dell echoes Microsoft’s sentiments: no significant impact. “Now that dock workers are back on the job, it’s alleviated the concerns,” says Mike Maher, a spokesperson for the Round Rock, TX-based company. But when queried about the impact of future work slowdowns and/or stoppages, Maher admits that “at some it point would affect us, because air transportation is more costly than sea transportation.”
J. Craig Shearman, spokesperson for the Washington, DC-based National Retail Federation, says that the NRF has heard from port operators that dockworkers are working about 30% below their normal rate. “We’ve seen the accusations from the PMA; we’ve seen the response from the ILWU,” Shearman says. “Whoever’s to blame — we’re not getting the merchandise as quickly as we need to get it. They can argue about whose fault it is, but when it comes to the number of trucks showing up at our loading docks, they’re not showing up often enough or soon enough.”
NRF members just want to have in-demand goods in stock and ready to go for the holiday rush. “There are a lot of toys sitting on the docks that need to be under a tree by Christmas Day and we’re not sure they’re going to make it,” Shearman says.
David Pluviose is associate editor of Operations & Fulfillment.