Port Shutdown Prompts Economic Concerns
With West Coast ports partially shutting down over the weekend, businesses have grown increasingly more concerned over how the ongoing dispute will continue to impact the economy.
For the past nine months, the Pacific Maritime Association and the International Longshore and Warehouse Union have been struggling to agree on a new labor contract. Even with congressional pressure and federal mediation, the two sides have been unable to agree upon some key areas.
Jonathan Gold, the vice president of customs policy at the National Retail Federation, notes that retailers and businesses have made preparations to overcome the brief shutdown and the continuous port slowdowns but the situation will only become more difficult if the dispute is not solved.
“In preparation for this, a lot of retailers have had contingency plans in place,” Gold tells The Daily Caller News Foundation. “They want to make sure the good are in.”
Despite businesses planning ahead, Gold does note that optimism is quickly giving way to concern. Many businesses are concerned over the constant back and forth between the two sides and the potential of another, and possibly longer, shutdown. If the dispute leads to another shutdown, the economy could greatly suffer.
“A full shutdown would cost the U.S. economy about $2 billion a day,” Gold warns. “Even with the slowdowns and congestion, companies are still hurting.”
While the PMA has accused the union of purposely causing the port slowdowns as a means of pressuring them at the bargaining table, ILWU defended itself by noting much of the congestion was happening before the current negotiations.
Kurt Salmon, a global management consulting firm, warns damage has already been done and will continue to only get worse if the dispute is not solved.
“But even if contract talks succeed in overcoming the stalemate between dockworkers and port terminal operators, the challenges for the retail industry are just starting, and consumers – and investors – could feel it in their wallets,” Kurt Salmon detailed in a press release. “The ports are simply not structured to manage the combination of large ships and high volume. Retailers need to investigate new supply chain options – fast.”
Kurt Salmon also notes that companies who have had to rely on more expensive alternative shipping routes have already begun passing the increased cost onto their customers.
Retailers have grown so concerned they have sent several letters to the PMA and ILWU along with lawmakers in the hopes of resolving the conflict. In one recent letter, dozens of manufacturers, farmers, wholesalers, retailers, importers, exporters and distributors wrote to express their concern over the rhetoric and growing hostility they have seen from both sides throughout the negotiation process.
“As customers of your ports, and industries affected by their operations, our members desperately need this negotiation to be concluded and operations returned to normal levels of through-put,” the letter noted.
“Over the summer months, both sides verbally agreed to work during the negotiations without interruptions,” the letter continued. “That promise was broken and the consequences have been to the detriment of our collective industries, the economy and our global competitiveness.”
“The stakes are extremely high and the uncertainty at the West Coast ports is causing great reputational and economic harm to our nation,” the letter declared. “The competitive marketplace will respond if you continue on this current path.”
As the letter points out, foreign competitors are already using the slowdowns and the resulting uncertainty as a reason not to purchase American made or grown products. Additionally, retailers are already seeing delays stretching far into spring.
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