Shipping Out

As extended labor negotiations between shippers and dockworkers fail to progress, a shutdown of West Coast shipping ports could occur as early as tomorrow. A shutdown would threaten retailers'abilities to get imported merchandise and supplies, primarily from Asia.

Shipping companies and the dockworkers'union have been in talks for eight weeks, but no new contract agreements have been reached. Members of the International Longshore and Warehouse Union, which represents about 10,000 dockworkers, are currently operating under a contract extension that lasts until 8 p.m. tonight (Eastern Daylight Time). The carriers, members of the Pacific Maritime Association, have said they might shut down ports if the unions conduct a work slowdown similar to the ones they conducted during contract negotiations in 1996 and 1999.

A 10-day shutdown of West Coast ports (in California, Oregon and Washington) could cost the U.S. economy as much as $19.4 billion, according to one report. And while Asian imports of electronics and household items are significant, retailers'major concern with a strike at this time would regard apparel items, as they prepare for their back-to-school merchandising season. If the shutdown ran for a long enough time, the Christmas selling season could be affected.

Of the $40.6 billion in annual apparel imports, 52 percent are said to arrive through West Coast ports according to a Salomon Smith Barney report. And the peak shipping season for most apparel retailers runs from July through October.

Most large retailers appear to have made contingency plans. Wal-Mart is said to have accelerated deliveries and now has three to five weeks of inventory in storage. The Gap has said it may reroute shipments to the East Coast ports or bring in goods by air. The Limited has reportedly already been sending merchandise to Miami. Sears, Target and Nike are also reported to have made alternate plans in case of port closures.

“Unless a strike lasts a long time,” says retail analyst and publisher Kurt Barnard, “there won't be a major impact on retailers'bottom lines.”