- The Washington Times - Saturday, November 16, 2002

Manufacturers are finding shipping alternatives to the West Coast ports to avoid any further labor disruptions as they head into the busiest shopping season of the year.

They are skeptical about whether the dispute between port operators and longshoremen that shut down all 29 West Coast commercial ports for 10 days in September and October will be resolved by federal mediators.

A new industry survey suggests that shippers will scramble for alternatives particularly on the East Coast unless a labor agreement is reached soon.

"Most often, a shipper who would normally use ocean for freight would turn to air freight in a time-sensitive or emergency situation," said Arnie Bornstein, spokesman for BDP International, a Philadelphia transportation logistics provider for the shipping industry.

The BDP International survey of 600 shippers found that 52 percent planned to divert cargo to East Coast ports if the West Coast ports are shut down again. One-fourth would choose air cargo, and 29 percent preferred shipping by sea to Gulf Coast ports. The others said they would stockpile their inventory or find other suppliers.

In most cases, the change to air cargo is "prohibitively expensive," said Steve Sugerman, spokesman for the Pacific Maritime Association, the group representing West Coast port operators and shipping lines.

Nevertheless, some manufacturers have flown in parts to keep their plants open.

Air cargo giant Emery Forwarding reports that its business is up significantly, despite the higher rates manufacturers and other shippers are paying. Shipments by air are charged by the pound, whereas shipments by sea allow shippers to lease a container and fill it with as much freight as they can fit into it.

Last month President Bush imposed an 80-day cooling-off period to end the 10-day West Coast ports lockout that cost the U.S. economy nearly $1 billion per day. Meanwhile, cargo piled up at ports, produce rotted and ships from Asia were forced to wait offshore. Only last week did the West Coast ports say they caught up on their backlog of cargo.

This week federal mediators returned to the negotiating table with the International Longshore and Warehouse Union and the association. The 80-day cooling-off period for them to reach an agreement ends Dec. 28. Afterward, either side can legally return to job actions such as lockouts or strikes.

Late December and early January have become one of the busiest times for retailers, as shoppers try to find deals through after-Christmas sales.

"The problem is that a lot of Christmas goods come from Asia," said Nancy Colvert, Emery Forwarding's spokeswoman. "People are trying to get things here to make that Christmas shopping window. For some products, there's a very large percentage of total sales that occur at Christmas."

She mentioned as examples VCRs, digital cameras and other consumer electronics.

So far, most of the switch to other transport modes is a West Coast phenomenon.

Sally Davenport, spokeswoman for FedEx Corp., said the company, the nation's largest air cargo carrier, has noticed a "marginal" increase in business because of the West Coast ports labor dispute. However, "It's simply not the kind of cost, moving it to air, that many customers would be willing to undertake."

Local airline industry officials made similar observations.

"We got one charter flight that transported some Harley-Davidson goods," said John White, spokesman for the Maryland Aviation Administration, which oversees Baltimore-Washington International Airport. "Other than that, we were unaffected."

Some Asian shippers that do not want to pay air cargo rates are instead sending their ships around South America to Eastern ports, such as the Port of Baltimore.

"I'm sure we picked up some traffic as a result of issues on the West Coast," said Jim White, Port of Baltimore executive director. "But it hasn't been a windfall for us."

Mr. White said many shippers that choose air cargo have no other choice because of the switch in recent years to "just-in-time" inventory, which means shipments are timed to arrive when they are needed instead of being stored in warehouses. The problem is that supply-chain interruptions such as the West Coast labor dispute convert just-in-time to "just-in-case" inventory, he said.

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