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The international supply chain crisis that has impacted U.S. logistics firms, retailers and consumers could intensify this summer.
West Coast union dockworkers may strike if they don't come to an agreement to replace their existing contract with marine terminals. The contract is set to expire at the end of June.
Major retail chains have already ordered extra goods from Asia as insurance against a breakdown in contract talks, keeping the goods at newly developed storage yards near the twin California ports of Long Beach and Los Angeles. Such lots allow retailers to move containers more quickly, preventing them from being delayed under piles of cargo at congested ports.
Walmart alone has room for 4,000 shipping containers at the ports' overflow yards, Pacific Terminal Services Vice President of Commercial Operations Sepehr Matinifar told The New York Times.
Space constraints in the area led to the rise of the new storage yards. By Q2 2021, industrial vacancy near the ports of Los Angeles and Long Beach was below 1%, according to CBRE.
Even with beefed-up orders kept in storage yards, a slowdown or strike by West Coast dockworkers would compound the pandemic-induced supply chain woes that have seen record backlogs of container ships off the ports of Los Angeles and Long Beach waiting to be unloaded.
The International Longshore and Warehouse Union, which represents nearly 22,000 workers at 29 ports along the West Coast, recently put together its contract negotiating team. Nearly three-quarters of those workers are employed at the ports of Long Beach and Los Angeles, the major nexus for goods shipped from Asia to North America.
In 2014, the last time the union and shipping companies negotiated a contract, a labor slowdown brought activity at Pacific ports nearly to a standstill.
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