Port Congestion Is Bad for LA’s Future – Forbes

The logistics bottleneck currently impacting Los Angeles/Long Beach, Seattle, Oakland and other west coast ports is being explained as a confluence of little problems morphing into a big problem. Many commentators blame chassis shortages. Others blame bigger vessels. Some even invoke weather problems months ago to explain why cargo like apples, meat, and other agricultural products can’t get out and toys, clothes and other Christmas merchandise can’t get in.

I think it’s simpler than that. The union is girding for battle while management holds its ground and the result is an epidemic of work slowdowns that neither side really wants to talk about much. Regional press in Seattle, LA and San Francisco are covering the story with credible evidence of “industrial action” as the Brits call it, yet all seem worried about the black eye this gives Pacific trade routes.

They should worry.

Risk Avoidance and Pacific Trade

Supply chain risk has become a hot topic lately with concerns about rising costs, capricious regulations and long supply lines dampening the appeal of China sourcing. This effect is worst for retailers who have come to rely so heavily on suppliers producing in China that they worry more than any other industry about logistics disruptions.  The data below, which was collected this past summer, shows that many foresaw the current problem.

Regardless of how negotiations between the International Longshore & Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) go the damage may already have been done. Research we conducted almost two years ago found that over half of supply chain executives (57%) planned to re-shore at least some of their manufacturing with the biggest winner of new capacity being Mexico.

At the same time, increasing automation and new manufacturing technologies create more opportunities for smaller run, agile manufacturing closer to end markets. One loser is obviously low cost country sourcing from China, but as the ILWU and PMA will likely discover, another is Los Angeles/Long Beach.

Fairness and the Long View