eyefortransport data shows a mixed view on shippers’ perception of West Coast port labor talks

While there is no resolution yet regarding the West Coast port labor contract talks between the Pacific Maritime Association (PMA) and the International Longshore Warehouse Union (ILWU), things remain business as usual at the 29 ports in California, Washington, and Oregon and 20,000 total workers impacted by these labor talks.

The official contract between the two parties ended on July 1 and there is no new one in sight, at least not one which is publicly known as neither the PMA nor the ILWU has offered anything up in recent weeks, other than communicating that they are still negotiating, which is better than being on strike for all supply chain stakeholders.

One thing that has been apparent during this time is that this situation has shippers’ attention, as evidenced by higher than usual import volumes at West Coast ports, especially in June, with July at a more seasonal level but still strong.

Industry analysts talked about steps shippers may take if a strike did occur, such as contingency plans through shipping earlier than usual to ensure there is enough inventory on hand, and shifting cargo to East and Gulf coast ports as well as Canada and Mexico, with air cargo as option for last minute orders, which is far more expensive.

Other options experts told LM included increasing the use of non-U.S. West Coast liner service with carriers in an attempt to assure space availability in the event of a disruption by having a preferred existing customer status and exploring source-supply shifting, in those limited instances where that is plausible in the short run, to suppliers where the supply chains that don’t depend on U.S. West Coast ports.

So, where does that all leave things now, with no apparent signs of talks ending and a deal in hand at this time?

Data released by London-based eyefortransport (EFT) earlier this month, which surveyed manufacturers and retailers prior to the July1 expiration of the PMA-ILWU contract was mixed.

When asked what level of disruption they expected when the contract was set to expire, EFT stated that:
-9.0 percent expected a major disruption, which would require a total rethinking of supply chain operations;
-51.1 percent said there would be a moderate disruption requiring some rethinking of supply chain operations;
-32.6 percent expected minimal disruption with some interruptions but still manageable under the circumstances; and
-7.3 percent said there would be no disruption as talks would be resolved in time

Well, we know that the last data point did not happen, which dovetailed into the next question regarding how long possible disruptions would last. Now, we know that the ports are still open for business even though there is no deal, but the data is still interesting all the same.

Nearly 7 percent (6.7 percent) of shippers said disruptions would last 6 months, with 31.5 percent of shippers saying it would be 3 months, and 48.3 percent and 13.5 percent calling for 1 month and no disruption, respectively.

The aforementioned contingency plans shippers might make in the event of a strike are viewed differently by shippers surveyed by EFT, with 8.6 percent of them saying they lack an actual contingency plan as their business relies entirely on port access, and 32.8 percent citing minimal contingency as it is “impossible to work around the ports entirely,” and 46.6 percent pointed to moderate contingency with as many alternate routes possible planned to minimize the impact as much as possible. Lastly, 12.1 percent called for complete contingency plans capable of dealing with any eventuality.

Port-related disruptions are a reality in the sense that they have occurred in the past and are likely to occur in the future or even sooner, depending on what happens out West.

The final question of the EFT survey asked about the future of labor disruptions to the supply chain and its findings were telling.

7.4 percent said disruptions will decrease as contract negotiations improve and both sides see eye to eye. The vast majority––at 54.9 percent––said disruptions will continue as they have since 2012, and 37.7 percent said that there will be increased disruptions at ports as traffic increases and more pressure is put on ports to lower costs.

Even though this data can be viewed as “old” in the sense that there is not a whole lot new to report about the port labor talks, it does a good job of looking into the mindset of shippers as talks continue. Different shippers have different needs and different approaches to supply chain management. That is made clear by the EFT findings, but at the same time they all have the same goal: to move cargo efficiently and effectively and within budget, too.

Even though, it is hard to predict what happens next with these labor talks, this data helps to provide a good snapshot of how shippers are approaching the situation both now and into the future.