Prolonged California port strike could affect retailers
LONG BEACH, CA - NOVEMBER 29: Members of International Longshore and Warehouse Union Local 63 Office Clerical Unit walk a picket line near APM Terminals, halting cargo at the busiest seaport complex in the nation on November 29, 2012 in Long Beach, California. The strike is the largest work stoppage at the ports of Los Angeles and Long Beach since a lockout by shipping companies in 2002, which prompted President George W. Bush to intervene with a court injunction to resolve the standoff. (Photo by David McNew/Getty Images)
America's busiest port complex has been largely shut down for the last several days, with workers on strike. Negotiators for the Ports of Los Angeles and Long Beach, and the unionized clerical staff who work there, are trying to find common ground as the closures drag in to a fourth day.
The ports handle 40 percent of the nation's imports, mostly from Asia. That includes a lot of those pajamas, toys, and electronic gizmos that might be on your holiday list. On a normal day, the ports move about $1 billion worth of goods. But because of the strike, there are at least 18 ships in the harbor, filled with boxes, waiting to be unloaded.
That bottleneck could be felt across the country. Page Siplon, executive director of Georgia’s Center of Innovation for Logistics, says millions of jobs are involved in moving those boxes from the southern California ports on to trains and trucks in to warehouses and then to the stores, big and small, where we buy the stuff inside.
Siplon says if that supply chain backs up because of a port closure, “that ripple effect is felt through all the other pieces of the ecosystem.”
The National Retail Federation, which represents many of the nation's big retail chains, sent a letter to President Obama on Thursday, calling on him to intervene. “A prolonged strike at the nation’s largest ports would have a devastating impact on the U.S. economy,” the letter warned. “We call upon you to use all means necessary to get the two sides back to the negotiating table.”
But in the short term, the strike isn’t likely to disrupt the holiday shopping season that is now in full swing. In order to get on store shelves in time, most of this years’s gifts passed through the ports back in October.
“This is a fairly light time for shipments, and obviously there are other ports along the west coast where ships can be diverted,” says economist Gus Faucher, with PNC financial services.
He says while this week’s port closures will have some short term effect on the Los Angeles economy, he doesn't expect much of an economic hit nationally, unless the strike drags on for weeks.
The ports and their clerical staff have been stuck in a contract stalemate for more than two years. Workers contend that terminal operators have outsourced local unionized clerical jobs -- which average $165,000 in annual pay -- to non-union workers out of state and overseas, hurting the local economy. Port managers and shipping companies accuse the union of trying to get jobs filled when positions are not needed.