US ports dispute taking toll on economy

Published Thu, Feb 19, 2015 · 11:30 PM
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[WASHINGTON] Federally mediated talks to end a grinding labor dispute at US West Coast ports entered their third day Thursday as complaints mounted from businesses feeling pain on both sides of the Pacific.

Massive container ships were backed up around key ports from Long Beach in southern California to Tacoma, Washington as some 20,000 longshoremen continued their work slowdown to pressure port owners to agree a new contract.

The port of Oakland, the key container terminal for the San Francisco Bay area, was completely closed for the seventh day this month as dockworkers held a union meeting.

US businesses from potato producers to online retailers complained of mounting costs from the port slowdown, while in Japan automakers said they were being forced to air-freight crucial parts.

The head of Nintendo said deliveries of its hot new game console were being held up at the ports.

There was no news of progress in the talks Thursday from the Pacific Maritime Association, representing management for 29 West Coast ports, and the International Longshore and Warehouse Union.

Without a deal, businesses worry the situation could turn into a full-blown strike with nothing moving through ports which handle about half of the country's trade, most of it to and from Asia.

The impact could roll across the already sagging global economy.

After being ordered into the fray by President Barack Obama, Labor Secretary Thomas Perez spent a third straight day in talks Thursday to resolve the impasse.

Both sides say the other is asking for too much in terms of concessions.

"They need to understand that a very quick solution is needed here," said John Keeling, chief executive of the National Potato Council, which has seen a sharp drop in sales to Asia.

If Perez cannot mediate a solution, he said, "The president should step in and become a part of this." While negotiations have gone on for nine months, the work slowdown that caused ships and containers to back up began in late October and has progressively worsened.

Adding their own pressure, port management shut down operations on two recent long weekends, aiming to hit workers' holiday and overtime pay.

The net effect is that the ports are processing much less freight than they did a year ago: down 13 per cent in January in Tacoma and Seattle, nearly 20 per cent in Long Beach, and down 32 per cent in Oakland.

"We have been strongly urging the two parties to come to an agreement on a new contract, so that we can clear the backlog of cargo on the docks and the ships anchored off the coast," Port of Long Beach chief executive Jon Slangerup said.

The costs were mounting for a broad range of industries. Giant retailer Walmart warned Thursday that the slow unloading of imports could hurt its ability to fully stock its stores in the upcoming spring season.

Honda Motor reduced shifts in its Greensburg, Indiana plant due to parts shortages.

"The continuing strike action is slowing down cargo shipments and the company has not been able to supply enough parts in North America," Honda spokeswoman Yuka Abe told AFP.

Keeling said that the potato industry is losing US$50-75 million a month in sales to Asia, mainly of frozen french fries.

"It's a big deal" that is giving the advantage to European competitors. "The market for potato products is very competitive." In Japan, the top three automakers said Wednesday that they were resorting to expensive air freight to keep their US plants running.

The overall cost to the US economy has not be totted up. But Tom Derry, chief executive of the Institute for Supply Management, which surveys a broad range of industries, said the impact remains limited because businesses were better prepared than in previous port labor disputes.

"Most companies already had contingency plans in place," he said.

On top of more choices for shipping, including routing items to Gulf and East Coast ports, "Companies have more resources in terms of sourcing opportunities," like buying supplies from Mexico.

While it still adds overall to costs, he said businesses could handle a slowdown for another six to eight weeks.

"We are much more resilient as an economy to these kinds of disruptions than we were before," he said.


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