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Port lockouts and the sea’s importance in supply chain

Dan Weissmann Feb 12, 2015
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Lawmakers from both parties are urging President Barack Obama to get involved in the labor dispute that has snarled ports on the West Coast for months. Container ships are stacked up from Los Angeles to Seattle. And now: Port operators locked out  workers Thursday, and they’ll do it again over the upcoming Presidents Day weekend.  

An estimated $1 trillion dollars in goods moves through those ports annually – and when those goods stop moving, supply chains nationwide get broken. There are an awful lot of people … on the spectrum from concerned to panicked,” says Allan Rutter, a researcher at the Texas A&M Transportation Institute.

For instance, most manufacturing now runs on a “just-in-time” system.  When parts don’t arrive, assembly lines can stop.

“What manufacturers are extremely good at is problem-solving, and coming up with work-arounds,” says Robyn Boerstling, director of transportation and infrastructure policy for the National Association of Manufacturers.

But work-arounds are expensive. For instance, Fuji Heavy Industries says it’s paying $60 million a month to fly Subaru parts to U.S. plants to keep things running.

Some businesses are unable to ship things out of the country. California citrus growers say they’ve lost half a billion dollars in foreign business. Retailers are becoming unglued as they wait for imported products.

Dan Boaz, founder of airfreight.com, is looking at what happens once the ports start moving again. “It’s going be a whole ‘nother secondary-effect nightmare. Everyone’s going to want to be at the front of the line, and everybody’s going to want to get their freight.” And, he says, it’s going to be a great opportunity, for him.

 

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