Could a LA Port Strike Threaten the Supply-Chain?
April’s 24-hour shutdown of ports in LA and Long Beach highlights a threat to the supply chain that remains despite being in a post-covid era. Labor negotiations at the ports have struggled to find common ground, and the threat of a full-blown strike has grown.
During the pandemic, it was common to see dozens of ships waiting outside the LA area harbors, often for several weeks. Shortages of parts, supplies, and tools for construction sometimes made it impossible to get projects done on time.
The Decline of LA Ports
The backup led to delays for nearly 40% of U.S. imports from Asia and interrupted deliveries from almost every other import location. Recently shipments from Asia have fallen significantly and have allowed the ports of New York and New Jersey to grab number one status from LA occasionally. Manufacturers and retailers contributed to the decline by shifting cargo to the East and Gulf coasts in order to avoid the backup in LA.
Workers are understandably concerned about the downturn. The affected workers include truckers, logistics personnel, and warehouse workers.
“It’s likely that some of that business will never come back,” said O’Connell, who works for Beacon Economics. The current stoppage, he added, will create a ripple effect, affecting a myriad of jobs and industries tangentially tied to the movement of cargo through the region.
The “economic impact of this shutdown will be felt,” he said. *
No Backup Plan
The Port of Los Angeles has no backup plan in case workers strike. Executive Director Gene Seroka stated:
“There are no contingency plans for this,” Seroka said when asked during an online press conference. “This is not a transactional business. Purchase orders go in from merchandisers at large and small companies 90 to 120 days before a ship sails. Once that product is ready and it’s booked to a vessel, that’s en route from 14 up to 40 days before it gets to Los Angeles, and then moves to its onward carriage, destination, warehouse, fulfillment center, crossdock or storefront for our ultimate consumers.” **
The union hasn’t gone on strike since the 70s, and Seroka doesn’t believe a strike is likely. Negotiations have been going on for eleven months and reflect the typically slow process.
The National Retail Federation and other groups have urged the White House to step in to facilitate a compromise between the union and the Pacific Maritime Assn., which represents shippers.
The Los Angeles and Long Beach ports are vital enough economically that the White House has reason to engage. President Bush intervened after an 11-day shutdown that affected 29 West Coast ports. Employers had threatened to lock West Coast longshoremen.
President Biden helped negotiate a deal that expanded local ports’ working hours to reduce the delays resulting from pandemic-related issues.
Will it matter?
It seems unlikely there will be any significant port stoppage before a contract is hammered out. There could, however, be delays, work slowdowns, and temporary stoppages.
The construction industry has been struggling with inflation and worker shortages for some time. In fact, worker shortages are likely to remain a much bigger concern than a possible strike at LA ports. However, if there were a prolonged strike, it could affect the whole economy.