WT100 Blog


Retailers Contemplate Contingency Plans

As West Coast port contract negotiations commence, retailers look at options.

June 6, 2014

Contract negotiations between the West Coast port dockworkers and management continue into June as supply chain stakeholders anxiously await an amicable resolution, hopefully but not likely, before the current contract expires on June 30, 2014.
While most parties believe that talks between the International Longshore and Warehouse Union (ILWU), which represents the dockworkers, and Pacific Management Association (PMA), which represents the terminal operators, will likely extend beyond the deadline, the big question facing farmers, manufacturers, retailers and others is whether or not we will see a supply chain disruption.
Will there be a repeat of 2002, which resulted in a 10-day lockout of the ports, or will we see a repeat of 2008, where the parties worked through the contract?
Throughout this process, NRF has urged both parties to negotiate a new contract without engaging in any supply chain disruptions.
While it is still unknown what will happen in the negotiations, the good news is that the parties have already started talking and continue to remain at the negotiating table (a positive sign). Now, following normal protocols, there will be a media blackout from both sides throughout the negotiations.
As the talks continue, retailers and others will continue putting contingency plans into place to ensure their cargo is not interrupted by potential disruptions at West Coast ports. Shippers learned a hard lesson from the 2002 lockout and the most recent action at East and Gulf Coast ports. Contingency plans come at a cost, though. Shipping early, diverting cargo to alternate ports, utilizing air transportation or storing products at warehouses all come at a cost, and higher costs for shippers and retailers equates to potentially higher costs for consumers.
As the world's largest retail trade association, NRF will continue to keep a close eye on the contract negotiations and will provide updates as they become available (though they might be rare, due to the blackout). Interested members should also consider joining the NRF Strategic Supply Chain Council.
While we do not think there will be a repeat of the 2002 port fiasco, it is important for retailers, shippers and other port stakeholders to be ready and prepared for any possibility.
 

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