“Our economy cannot withstand another port disruption.”
That was the assessment of Matthew Shay, president and CEO of The National Retail Federation, after voicing relief about the negotiated settlement of the West Coast port strike. The parties involved were The International Longshore and Warehouse Union Local 63 Office Clerical Unit and the Harbor Employers Association at the Ports of Los Angeles and Long Beach. While Shay said he’s hopeful the affected operations will quickly recover, he warned of the consequences of similar labor actions at the East and Gulf Coast ports.
Federal mediators have been working with labor and management at those sites for the past two months. But let’s not be too quick to shift our attention from the left coast. Material Handling and logistics managers on that shore must still deal with the consequences of what just happened. I had an e-mail conversation about this with Jim Tompkins, CEO of Tompkins International and member of MH&L’s Editorial Advisory Board. He thinks the multiple pressures of dealing with higher holiday volumes, the new consumer traffic patterns (Thanksgiving Day shopping and Cyber Monday specials every day of the week), trying to find transportation capacity, the “promotion orientation” of retailer customers, and the consumers’ push for next-day and even same-day service are all proving the inadequacy of the logistics professional’s already 60-hour work week to deal with them.
In many cases logistics pros will be busy enough just doing what they can to survive the next three weeks as opposed to trying to strategically deal with the key issues of transportation and customer satisfaction, Tompkins told me.
As for what just happened in LA and Long Beach, he calls this event a “baby” compared to the scope of what could happen on the other side of this country.
“If this East Coast strike occurs in a little over three weeks from today, this could be a biggie as this strike would impact all 14 East Coast and Gulf Ports,” he said. “Just the potential of a strike causes insecurity and inefficiency in our ability to handle global trade. We need to eliminate the threat of these strikes and get back to a reliable flow of goods. The option of a port strike is not something our economy can deal with and needs to be derailed before we approach the deadlines.”
He believes two things need to happen:
1. Organizations must build more strategic capability into their transportation processes, and
2. Lawmakers must get out ahead of these labor problems and solve them before they threaten U.S. global trade capability.
While you’re digesting those chunks of advice, let’s revisit the West Coast situation one more time and consider this: many of the trucks that would have been transporting goods from the ports for the last eight days have been parked. And although most of the Christmas inventory has already been delivered to warehouses and stores, there is still the “quarter end” phenomenon to consider.
Oh no, not another phenomenon. What’s this one?
This one comes from Tan Miller, another MH&L Advisory Board member. He’s director of the global supply chain management program at Rider University, and he points out that manufacturers and suppliers in several industries record a significant portion of their revenue with last-week-of-the-quarter shipments to retailers. This is inventory that is not part of the Christmas rush. If any of that inventory is still stuck on those idled trailers and fails to reach suppliers in time for them to ship it out to retailers, that could affect shipment revenues at year end.
To be fair, Miller added that this point is debatable, and as an academician he could even challenge himself to a little mental duel over it. Nevertheless, it’s substantial enough for you to consider—along with all the other labor pains that birthed that troublesome baby on the West Coast.
