With idled cargo ships piling up along the coastline, President Obama ordered his labor secretary to California to try to head off a costly shutdown of 29 West Coast ports.
Obama dispatched Tom Perez on Saturday to jump-start stalled labor talks between shipping companies and the dockworkers’ union. The move ramps up pressure to resolve a dispute that stranded tens of thousands of containers on cargo ships over the holiday weekend.
The Los Angeles and Long Beach ports account for some 40% of the nation’s incoming container cargo, with $ 1 billion in goods moving through daily. A prolonged shutdown could hobble some Southland businesses and ripple across the U.S. economy.
On Saturday morning, 32 massive ships were anchored outside the ports, unable to unload thousands of cargo containers filled with auto parts, electronics and clothes destined for store shelves across the country.
“Any company that imports supplies, inventory or parts is going to feel it,” said Ian Winer, a managing director at Wedbush Securities. “There are very few companies who don’t have something coming through those ports.”
That has businesses across the world focused on a dispute between a network of terminal operators and one of the strongest unions left in American industry.
After nine months of talks, the two sides agree on key issues including healthcare but remain gridlocked over rules governing the removal of arbitrators, who settle disputes on the docks.
At stake is a new contract for roughly 20,000 dockworkers at 29 West Coast ports. The International Longshore and Warehouse Union has been working without one since July amid negotiations with the Pacific Maritime Assn.
The association has accused union workers of slowdown tactics and has at times halted the unloading of ships, including this weekend. The local union denies the allegations. The unloading of ships is expected to resume Tuesday.
But the congestion has been building for months, because of the labor dispute and other factors. And the holiday weekend stoppage heightens fear of a longer-term disruption.
Some businesses have attempted expensive workarounds, rerouting goods via air or through Gulf and East Coast ports, analysts said. Items ordered by retailers for the spring probably won’t reach stores on time. Deliveries from Asian manufacturers could be delayed until after the Chinese New Year, which starts next week.
For now, retailers still have inventory left over from the holiday season, analysts said. But they will need shipments before the busy spring shopping season.
Communities close to the ports have been hit first and hardest. In Los Angeles, which has recovered slowly from the recession, truck drivers and warehouse workers are already seeing their hours cut.
Elsewhere in the state, the agriculture industry is in pain.