Slowdown puts brakes on some flooring shipments
February 16/23, 2015; Volume 28/Number 17
By Ken Ryan
The ongoing labor dispute between the longshoremen’s union and shipowners that has brought crippling delays to West Coast seaports is hurting many flooring importers.
At press time, 29 West Coast seaports that handle about $1 trillion of goods annually (including flooring) were closed for four of the five days leading up to and through President’s Day weekend. The dispute, which to a lesser degree has been going on since November, has escalated in recent weeks.
Caught in the middle are companies that rely on container ships to move goods from China to distribution centers and retail stores in the U.S.
Peter Spirer, CEO of MaxWoods, said the port issue is one of real seriousness and threatens to grow to massive proportions if the dockworkers do not agree to a contract. “Currently, there are dozens of container vessels lying at anchor outside the port of L.A. These are being processed at a snail’s pace to keep the pressure high. The same is the case up and down the West Coast, so moving on to an alternate port is not really an option. I understand that even Houston is backlogged either in sympathy for their fellow longshoremen or because there is too much traffic for them to handle.”
Spirer said MaxWoods has 10 containers on these stalled vessels, many of which are sold. The impact on service and cash flow is harsh. “We are diverting other containers from China to make the much longer and more expensive trip through the canal and into an East Coast port. This adds a good three weeks to the time, and we will still have to ship a portion of the goods back to California. A very expensive remedy.”
Not all importers say they are so adversely affected. Jonathan Train, CEO of EarthWerks, said that because these disruptions are “normal occurrences,” Swiff-Train, the distribution arm of EarthWerks, has worked on international logistics for decades. “These issues come and go. To handle this over the long haul, a supplier has to be willing to invest in the stock to manage these fluctuations. It does impact some of our business, but only on a small basis. We rely on our large U.S. inventory to handle most of the issues.”
Michael Raskin, CEO of Raskin Gorilla Floors, said his customers keep ample inventory—along with Raskin’s inventory in Dalton—to help alleviate the delays due to the port slowdown. “The very large commercial jobs are more of an issue with the slowdown as specific timelines are anticipated for job completion. We continuously review with our logistics people to avoid the West Coast whenever possible. We are considering revising the supply chain, reducing dependence on U.S. West Coast ports, increasing shipments via Canadian and all-water (Panama and Suez) to the East/Gulf Coast port.”
Russ Rogg, CEO of Metroflor, said his company has tried to alert its distributors as to what is taking place, and what impact it is having on Metroflor’s container shipments. “We are encouraging our distributors to share inventory amongst themselves as they often do. We are also suggesting that they use our distribution center in Shanghai for faster service on the Engage line and, of course, to simply be prepared for longer lead times and consider adjusting their order plans accordingly. There is unfortunately no simple answer.”
Spirer said there are no alternatives short of shipping to East Coast ports. “Given that around 35% of hardwood floors are imported, ‘disruptive’ would be a mild term to describe the chaos that would follow [in the event of a strike]. Much of the product from China is slated for multi-family installations or new private dwellings. This service delay can cause widespread delays and layoffs in construction.”
With such a massive impact on U.S. commerce at stake, there have been calls for President Obama to get involved. The National Retail Federation, which estimates a full, extended shutdown of the ports could cost the U.S. economy $2 billion a day, urged the Obama administration to intervene to keep the two sides at the negotiating table until a deal is finalized.
On Feb. 14, President Obama dispatched labor secretary Tom Perez to California to try and broker an agreement between dockworkers and the group representing shippers and terminal operators.