LA-Long Beach Union Talks to Resume Wednesday

By: Bill Mongelluzzo, The Journal of Commerce

Commentary:

Many supply chain managers remember the problems with the West Coast ports in 2004 and 2005 when mild slowdowns created significant backlogs of ship unloadings, the air cargo industry saw massive spikes in charter rates, and supply chains across the country backed up. Thus far in the negotiations between the clerical groups and the port authorities, there is very little in banter or posturing by either side. Typically, in a negotiation like this, if we hear strong comments by either side it is often a signal that the parties are some distance apart and one is exerting their power over the other.

It will be interesting to watch what happens with air cargo and distribution patterns for inbound. The volumes of cargo activity are strong for the ports at present and it looks to be a strong year for some. But, there isn’t enough that competition can’t play a stronger role in decision-making. Because inventory levels are so low at present, there are a lot of reasons why shippers might want to avoid the risk of a disruption in port activity at all costs – and divert their shipments to either air or a different port of entry altogether. That may be the reason why the public sides of the negotiations are going so “nice”. Because of the changes made to the process of getting cargo through the LA Basin port system, shippers are already under pressure to keep costs low and efficiency maximized. They probably won’t tolerate worries over port disruptions from a strike at this stage in the economic recovery cycle.

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