California Port Strike Enters its Fourth Day- Time for Risk Mitigation Planning
It has been another busy and hectic week in our global supply chain world. Even we at Supply Chain Matters cannot keep up.
A labor dispute involving 800 clerical workers at the Ports of Los Angeles and Long Beach has just about shut down operations involving 40 percent of the U.S. import trade. According to a published Bloomberg report, seven or eight terminals at the Port of LA and three of six terminals at the Port of Long Beach have halted operations. Union clerical workers, which handle most of the paperwork for ships entering these ports, walked out on Tuesday of this week amid an impasse on contract talks, and other union longshoremen have honored the clerical worker’s picket lines. According to an Associated Press report, at least 18 ships have been unable to either load or unload, since the strike began on Wednesday. Other anchored or inbound container or cargo vessels are being re-routed to other west coast ports such as Oakland, Seattle or possibly Mexico.
Since the Ports are operated by the city of Los Angeles, that city’s mayor has urged clerical workers to return to bargaining and reach an agreement, including the assistance of a mediator. A statement from the clerical workers indicates that they have been working without a contract for 30 months, with the main stumbling block being outsourcing of clerical work. According to the Bloomberg report, port officials claim that work has not been outsourced and that the issue is about promoting “featherbedding”, requiring the engagement of employees even when there is no work to perform.
The National Retail Federation has asked President Barack Obama to intervene citing that the 10-day west coast port strike that occurred in 2002 cost the U.S. economy about $1 billion a day and disrupted supply chains for at least six months. The AP story indicates that the chief negotiator for the shippers remained hopeful about a resolution, and indicated that talks have been professional and courteous. Thus, Supply Chain Matters believes that any federal governmental intervention is not likely to occur immediately, at least not until the economy is seriously impacted. The bulk of the holiday inbound goods have already arrived and have been moved from west coast ports weeks ago.
This walkout comes on the heels of stalled labor negotiations among longshoremen and 14 east coast ports including New York and New Jersey. The Federal Mediation and Conciliation Service is involved in these negotiations and a strike could come in January if an agreement is not reached. If the ports on both U.S. coasts are affected by a work stoppage, that would be a disruption of a far greater magnitude and will likely draw more intervention. Also, the specific Ports of New York and New Jersey are still dealing with the effects of infrastructure and facilities damage brought about from super storm Sandy in early November.
In the meantime, manufacturing, retail and service supply chain teams, if they have not done so, need to be initiating risk mitigation response planning concerning both U.S. west and east coast container bound shipments and inventory.
As we noted in our commentary opening, there is never a lull period in the world of global supply chains.