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June 06, 2023

So Far, Port Disruptions Aren’t Affecting Promo Supply Lines, Sourcing Leaders Say

Amid contentious contract talks, unionized dockworkers have taken labor actions that have slowed operations at West Coast ports that importers, including those in the merch industry, rely upon.

By  Christopher Ruvo

Promo products sourcing executives tell ASI Media that disruption to West Coast port operations caused by job actions from unionized dockworkers in recent days haven’t significantly impacted their supply chains.

shipping port

Still, industry sourcing leaders are keeping an eye on the situation as there is some concern that more disruption could be forthcoming amid contentious labor contract negotiations between the Pacific Maritime Association (PMA), which represents employers, and the International Longshore and Warehouse Union (ILWU), which represents more than 22,000 dockworkers at 29 ports from California to Washington state.

Why It Matters

Ports are important to promo as the majority of branded merch items sold in North America are manufactured in Asia and arrive by ship to these shores. During the COVID-19 era, vessel/cargo congestion and related operational clogs at domestic ports contributed to industry inventory shortages by slowing down the rate at which suppliers could replenish stock. The backups and delays have since abated, and no one in promo wants a repeat.

The Immediate Situation

The latest port issues began when dockworkers neglected to come to work or slowed down operations at ports from Los Angeles and Long Beach to Seattle starting Thursday evening into Friday.

PMA says “concerted and disruptive work actions … effectively shut down operations at some marine terminals at the ports of Los Angeles and Long Beach.” The association added that similar work actions “shut down or severely impacted operations at the ports of Oakland, Tacoma, Seattle and Hueneme.”

The labor actions continued over the weekend into Monday, again slowing operations at key marine terminals at the ports of Los Angeles and Long Beach and elsewhere on the West Coast, including the ports of Oakland and Seattle, according to the PMA.

“Union leaders are implementing many familiar disruption tactics from their job action playbook, including refusing to dispatch workers to marine terminals, slowing operations, and making unfounded health and safety claims,” the PMA says.

To date, the upheaval hasn’t affected promo supply networks, sourcing leaders tell ASI Media.

“We’re always concerned about port slowdowns, work stoppages and unsigned dockworker contracts, but so far there’s been no impact to our industry from this,” says Jeffrey Nanus, CEO of eco-friendly hard goods supplier AAA Innovations (asi/30023).

Leaders at Issaquah, WA-based Top 40 supplier SanMar (asi/84863) offer a similar assessment.

“The stoppage has had no impact to our supply chain,” says John Janson, SanMar’s vice president of global logistics.

Yuhling Lu provides additional perspective. “If the port stoppages last for a relatively short duration, such as less than two weeks, the impact on promotional supply lines will be limited,” says Lu, co-owner of Top 40 supplier Ariel Premium Supply (asi/36730).

The Contract Dispute

For more than a year now, PMA and ILWU have been in talks to establish a new contract for the unionized dockworkers, whose previous deal expired in July 2022.

While there has reportedly been progress on key issues, such as automation at ports, there remain points of contention, including over wages. With bonuses and overtime, full-time ILWU dockworkers reportedly last year made, on average, $211,000.

Still, an ILWU leader says members’ wages and benefits in comparison to PMA profits have fallen in percentage terms as ocean carriers generated “astronomical revenues” during the economic bounce-back that occurred in the U.S. and other western countries as COVID-19 societal shutdowns and restrictions lifted.

“The ILWU is committed to bargaining a contract that’s fair and equitable, including wages and benefits that reflect the dedication of the ILWU workforce and its contributions to the shipping industry’s success,” the union says in a statement.

The Promo Outlook

Janson views the latest round of port strife as the “ILWU flexing its muscle, sending a reminder that it has the ability to cause disruption.”

If contract talks continue to drag on, Janson suspects “there will be more frequent minor disruptions.” However, he does not at this point “foresee any long-duration port work stoppage” that would cause major delays in promo suppliers’ ability to get imported products landed at port and ultimately onto trucks or trains to go to warehouses for inventorying.

If West Coast port workers were to strike, there would be a potential ripple effect that could cause operational delays at other ports on the East and Gulf Coasts, where many importers – including promo suppliers – have already shifted at least some cargo as a result of concern over the West Coast dockworker contract talks, says Nanus. “It would certainly then slow down the supply chain,” he adds.

Jeffrey NanusBetween the geo-political issues we’re facing with China, the economic uncertainties we’re facing here in the U.S., and the West Coast ports, it’s a tricky time for suppliers.” Jeffrey Nanus, AAA Innovations

Still, like Janson, Nanus doesn’t anticipate a prolonged work stoppage by West Coast dockworkers.

“I would bet that the politics are such that the current presidential administration is watching the situation very closely and if push comes to shove, they will step in to broker a deal,” Nanus says. There’s precedent for that: In December 2022, Congress intervened to prevent what would have been an economy-crippling rail strike.

As things stand, Lu doesn’t anticipate a disruption of supply lines. “I’m not too concerned,” she says. “If the port labor talks extend too long without reaching a resolution, there will be mounting pressure on the government authorities to intervene.”

ILWU President Willie Adams says in a statement that talks between the union and PWA are ongoing. “Any reports that negotiations have broken down are false,” Adams says. “We’re getting there, but it’s important to understand that West Coast dockworkers kept the economy going during the pandemic and lost their lives doing so. We aren’t going to settle for an economic package that doesn’t recognize the heroic efforts and personal sacrifices of the ILWU workforce that lifted the shipping industry to record profits.”

Promo sourcing leaders say that the industry’s COVID-era supply chain crisis has ended, but have noted there will continue to be sourcing challenges to tackle, as the port worker talks evidence.

“Between the geo-political issues we’re facing with China, the economic uncertainties we’re facing here in the U.S., and the West Coast ports, it’s a tricky time for suppliers,” says Nanus.