The labor dispute involving West Coast dockworkers that stalled international trade at 29 ports that handle an estimated $1 trillion in cargo annually was tentatively resolved with a new five-year contract proposed on Friday, but many challenges remain.
The biggest immediate problem is clearing the backlog of goods waiting to move in or out. The dispute will likely result in shortages of some retail goods that may last for months. U.S. Secretary of Labor Tom Perez and Federal Mediation and Conciliation Service Deputy Director Scot Beckenbaugh assisted in the negotiations.
Although the ports never fully shut down, the dispute caused acute problems in the supply chain, reported The Blaze. The tentative contract must still be approved by the 13,000-member International Longshore and Warehouse Union's rank-and-file, as well as the full Pacific Maritime Association of employers. The union vote could come in April, but it was not immediately clear when employers will vote, according to The Blaze.
"As we welcome today's news, we must dedicate ourselves to finding a new way to ensure that this nightmare scenario is not repeated again," National Retail Federation president Matthew Shay was quoted in the Washington Post. "If we are to truly have modern international trade, supply chain and transportation systems, we must develop a better process for contract negotiations moving forward."
The West Coast port congestion could take as long as two months to undo, port and trade group officials told Reuters. Retailers and other companies are bracing for further shipment delays after the tentative resolution of the nine-month labor dispute.
"It's going to take time to get through all that and get to a normal rotation," Jonathan Gold, VP of supply chain and customs policy at the National Retail Federation told Reuters. "It could still mean there will be a delay in getting merchandise to the store shelves," Gold said. This might include items like spring or Easter apparel and footwear, and patio furniture.
Some observers noted that labor is only one of the challenges blocking smooth operation of the ports.
"The issues of chassis management, land-locked ports–currently gridlocked with little space–and the requirements for unloading larger ocean vessels confound a tough issue," said Lora Cecere, founder of Supply Chain Insight, writing on her blog, the Supply Chain Shaman. "Unloading at the western ports of Los Angeles and Long Beach have been an issue for many months."
The larger issue is the design of the ports, she said. "I don't think the ports are up to the challenge of moving the high levels of freight of larger ships without rethinking unloading space, equipment and flows. When today's big ocean containers come to port, the instantaneous need for chassis is high. It takes two to three days to unload a ship."
Then there is a shortage of chassis, which means the frames that the containers are placed on for transport by truckers. Without sufficient chassis, truckers cannot unload the ships and freight does not move, Cecere wrote in Forbes.
"This is not going to be pretty," she wrote in the blog. "Shipping will not return to normal at the West Coast ports for a LONG time. And, when the dust settles, I think that we will have a new normal. It is one that most companies are not ready for. It is my hope that the port authorities stop sugar-coating the real issues. Before the labor issues heated up in December-January, customer clearance was delayed at least one month with increased variability. I feel, based on my interviews, that it is going to get much worse before it gets better. Beware: This labor agreement is not a panacea."
Walmart boosts minimum wage as earnings climb
The next gen supply chain will separate retail's winners and losers
Walmart workers hold strikes in 20 cities
Amazon workers strike in German, Seattle as holiday orders peak
Walmart Sues to stop labor groups from demonstrating