West Coast Labor Dispute Plays Havoc With Bulk Vending Supply Lines

LOS ANGELES/LONG BEACH, CA -- A major labor dispute on the West Coast has paralyzed two of the nation's busiest seaports and is threatening to disrupt American supply chains, including bulk vending's. Negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union, which have been dragging on since the current contract expired in July, have resulted in work slowdowns and temporary closures of the Ports of Los Angeles and Long Beach.

Combined, the two ports account for more than 40% of all U.S. container traffic, as well as 70% of all container traffic from Asia and an even higher percentage of bulk vending merchandise. Capsuled for merchandise bulk machines and plush products for skill cranes have been bottlenecked at the two entry points for weeks.

Pick A Side (Any Side)

The union has denied instigating work slowdowns, pointing the finger at the carriers who have instituted changes in shipping and management practices. Management, for its part, has pointed its finger at the unions. "What they're doing amounts to a strike with pay, and we will reduce the extent to which we pay premium rates for such a strike," said PMA spokesman Wade Gates.

ILWU president Robert McEllrath said in a statement, "This is an effort by the employers to put economic pressure on our members and to gain leverage in contract talks. The union is standing by ready to negotiate, as we have been for the past several days."

Ships loaded with goods are backed up to the Pacific horizon, while cargo that is unloaded is taking weeks to reach warehouses. Bulk vending suppliers have seen their Asian shipments tied up dockside or literally left at sea. Even when ships dock, the containers may take weeks to leave the facilities and reach a warehouse.

"They recently closed down the docks for four days," said Carlos Villalobos of West Coast Consolidators, a major freight forwarding company based in Inglewood, CA. "Right now it's taking 15 days to three weeks to just get containers out of the port. And it's the consumer that suffers."

Bulk Industry Hit Hard

For bulk vending suppliers who rely heavily on smoothly functioning supply chains, the situation could turn ugly if a conclusion isn't reached soon.

"It's pretty bad. A congested nightmare," said A&A Global Industries' Brian Kovens. "One of our containers took six weeks to get from the pier to our warehouse. It will definitely impact our industry. It's affecting everybody -- not just bulk vending, but the entire country."

Brand Vending Products' Craig Goodman echoed Kovens' comments. "Every importer is challenged by this," he said. "We planned as much as we could for this type of problem, but there is no simple solution. We had one container that took a month to reach our warehouse."

Photo: Port of Los Angeles

For bulk vending suppliers, the situation may even extend beyond the smooth flow of new merchandise. In a typical transaction, merchandise is paid for prior to loading it on a boat in Asia. According to one other industry source, the lost weeks or months may cause some suppliers to feel the cashflow pinch with their merchandise languishing either on ships or at dockside. Another source noted that some trucking firms have been increasing rates to haul containers to from piers to warehouses. As a result, the cost for trucking containers a short distance (a few miles, even) can be higher than shipping the goods from China (about 7,250 miles).

"It's time for President Obama to take the first step toward following through on his call for modern ports by encouraging the completion of the West Coast port negotiations," said National Retail Federation chief executive Matthew Shay. "It's time for these talks to conclude, so full operations can resume and we can address the congestion that continues to face the ports."

In the meantime, both sides insist they are close to a deal that could be done in a matter of days. A federal mediator is currently involved in negotiations, which some insiders claim is smoothing the process. However, for many in the bulk vending business, the damage has already been done.