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U.S.:West Coast Port Shutdown Threatens Furniture Importers

West Coast Port Shutdown Threatens Furniture Importers
By Greg Landgraf

Longshoremen have been locked out of West Coast ports, in a dispute that has potential for serious impact on North American furniture companies, many of whom use the ports to import from China and other Asian nations.

Furniture makers are on pace to import more than $11 billion of product this year, including about $6 billion from Asia. Most of the Asian imports enter the country by sea through the West coast.

Overall, West coast ports handled $300 billion in cargo in the past year.

Brent Burton, vice president of transportation & logistics for the American Furniture Manufacturers Assn., said the timing of the shutdown could hurt furniture manufacturers in two ways, beyond the simple inability to receive product from Asia.

First is the upcoming Fall International Home Furnishings Market, which will be held later this month. However, Burton said, "The possibility of a west coast strike has been looming for several months, so furniture importers most likely shipped earlier or routed their products via the East coast ports to avoid delays."

Second is the fact that it is currently peak season for eastbound trade, as retail stores stock up for the holidays. While furniture shipments do not experience this peak, the congestion may delay or disrupt transit time and delivery schedules to final destinations.

Companies can attempt to book sailings through the Panama Canal to East coast ports as an alternative to the West coast, Burton said. "But only a limited number of carrier vessels are small enough to navigate through the Panama Canal, and those ships are most likely full due to contractual space guarantees to other shippers and peak season capacity" .

The Pacific Maritime Assn. initially locked out dock workers on Friday, Sept. 27. The lockout was lifted, but reinstated on Sunday when the PMA accused the International Longshore and Warehouse Union of understaffing operations and assigning workers to random assignments, rather than the jobs they were trained for.

The union's contract expired on July 1. Both sides had agreed to temporary extensions until Labor Day.

The central issue in the dispute is technology. The PMA wants to incorporate new technologies such as computer tracking systems and optical scanners to register cargo. The union wants guarantees that positions created by those systems would be covered by the union.

"According to the PMA, our ports today are far behind when it comes to the use of modern technology and these new technologies must be implemented to accommodate the continued growth of Asian import trade," Burton said. "Asia's use of technology enables their ports to move over double the throughput of container volumes as compared to the U.S. ports".

Both sides continue to talk, Burton added. The PMA has agreed to federal mediation, but the union has not. Mediators hope to meet with both sides on Thursday, but can do so only if both parties agree.

"The impact remains to be seen," Burton said. Already, he said, gridlock is building, with more than 100 ships of the West coast awaiting unloading, railroad companies not sending their intermodal trains to the West coast for fear of overloading the rail system, and overseas manufacturers not having the empty containers to fill with product.

With many furniture manufacturers involved in importing in some way, however, Burton said " All eyes will be watching as these contract negotiations continue, with hopes that both sides will reach an agreement this week

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