Dec 5 With West Coast port workers back on
the job Wednesday, U.S. retailers and trade groups were turning
focus back to negotiations to stop a potentially more damaging
port strike in the East.
Retailers ranging from Target and American Eagle
to Home Depot told Reuters they have their
holiday merchandise in place and the eight-day long strike at
the ports of Los Angeles and Long Beach would not upset plans.
However, a second, wide-reaching strike on the U.S. East and
Gulf coasts could change that for the upcoming spring/summer
season, for which merchandise will start to ship soon.
"Potentially, the strike on the East Coast is going to be a
much bigger strike. This potential strike (would span) Maine to
Texas, so the effects could be bigger," said Jonathan Gold, vice
president of supply chain and customs policy for the National
The collective bargaining agreement between the
International Longshoremen's Association (ILA) and the U.S.
Maritime Alliance (USMX) was originally set to expire on Sept.
30. That agreement was extended to December 29, averting a
potential strike that would stop deliveries to ports along the
U.S. Atlantic and Gulf coasts during the holiday retail season.
The ILA and USMX were not immediately available for comment.
About 20,000 longshoremen who handle container cargo from
Maine to Texas are represented by the ILA. USMX is an alliance
of container carriers, direct employers and port associations
along the U.S. East and Gulf coasts.
Trade groups like the National Retail Federation, American
Apparel and Footwear Association and the Retail Industry Leaders
Association are all following the developments closely.
Though they would not comment on the likelihood of a strike,
all of them said there could be serious impact on the broader
U.S. economy if the East and Gulf ports stopped working.
"Any port work stoppage impedes four million U.S. workers
from being competitive in the global market," said American
Apparel and Footwear Association's chief Kevin Burke.
"We should now focus our attention on ensuring the
stakeholders on the East Coast are negotiating in earnest to
prevent a strike from ever happening along the East Coast," he
ANOTHER PORT STRIKE?
The eight-day strike at the ports of Los Angeles and Long
Beach, which sapped the region's economy of an estimated $8
billion, ended on Wednesday.
This has already affected supply chain systems to some
extent, putting additional pressure on retailers to maintain a
On December 2, Gap Inc's Chief Executive Glenn
Murphy warned in a letter to U.S. senator Dianne Feinstein that,
given the holiday season, the company will not be able to
maintain its seasonal employees and would cut hours at Gap's
California distribution center if the the strike carried on for
"Each day of down time will result in up to 3 days required
for recovery to get our cargo to our retail shelves and a cost
of nearly $6 million a day in lost revenue potential," Murphy
said in the letter.
Trade experts say that although the dangers might not be
great, there will be some potential impact in the near future.
"This week, retailers were really looking hard at their
early January advertisements to make sure that the stuff that
was advertised for sales during that period was going to be
available in the stores," said Brian Dodge, spokesman for the
Retail Industry Leaders Association.
Others, like the NRF's Gold, pointed out that a shipping
delay of this kind comes with additional costs that the market
had not anticipated.
"(There will be) costs from the carriers, for repositioning
(merchandise), potential markdowns if merchandise isn't there on
time, fees from ports, other transportation costs. These are
things that are just starting to hit," he said.
Foster Finley, managing director and head of transportation
logistics at AlixPartners, said small- or medium-sized retailers
that use smaller shippers would have more difficulty getting
goods to shelves.
"As always, there will be some winners and losers as they
report on their holiday sales. The difference is, whether (the
strike) will be legitimately something that has impacted them or
it becomes a convenient crutch for them to point to when they're
trying to explain why they may have fallen short of
expectations," Finley said.