Survey Says: Shippers Diverting Cargo, Increase Stocks, Against More Port Shutdowns

Thursday, November 07, 2002
U.S. shippers, uncertain over timely settlement of the West Coast ports dispute, are making contingency plans against additional service disruptions, according to a nationwide survey by logistics specialist BDP International (BDP). Currently favored actions, reported by 74 percent of supply-chain managers surveyed, include cargo diversions to East Coast ports, favored by almost 52% percent; increases in safety stocks, 34%; alternate sourcing, 29%; and diversions to Gulf Coast ports, 29%. Shippers also anticipate long-term changes in supply-chain management, to be prepared for similar disruptions in the future. West Coast ports reopened Oct. 9, after the Bush administration imposed an 80-day cooling-off period under the Taft-Hartley Act. Federal mediators on Tuesday ordered a one-week break after negotiators failed to reach agreement on pension provisions. BDP and its Centrx supply chain consulting unit commissioned the survey by Adler Research between Oct. 24 and Oct. 30, two days before announcement of the tentative agreement on one key issue, technology. Nearly 63 percent of managers surveyed then were not optimistic about a timely settlement. Fully 53.5 percent favored extending the Taft-Hartley cooling-off period beyond the current 80-day limit. Among other findings, almost 63 percent of respondents said the West Coast port work stoppage came unexpectedly. Still, 44 percent reported preparing contingency plans prior to handle possible problems. Reported one shipper, "We were prepared for a number of two- or three-day closures that would cause one-week or two-week backlogs. We did not expect a two-week closure that would cause a month-or-more backlog." Another said, "I would have expected this during July but not so far down the road. I can't believe this was allowed to happen considering the major impact it would cause to a vast number of economies." Other shippers reported layoffs, angry customers and financial impact from lost sales and higher transportation costs. The business impact to one international shipper was compelling: "We are very discouraged. This is the first year that we have imported from Asia and it has been a terrible experience." Said another importer, "One product line was unable to ship for the month of October because it was sitting on a boat waiting to be unloaded. This hurt the company and its customers." Not all shippers complained, however. Wrote one, "It was great. It helped our sales. We are a U.S. manufacturer...and with reduction in foreign dumping...our company received orders from many companies looking for a domestic alternate source." As for long-term effects, while more than 48 percent of respondents reported no plans to alter supply chain strategies due to the shutdown, a 52-percent majority planned increased reliance on alternate port facilities. East Coast ports were the clear favorite, at 33 percent, followed in descending order by ports along the Gulf Coast, 21 percent; in Canada, 16 percent; and Mexico, 6 percent. About 21 percent of shippers planned to increase safety stock, while the same percentage expected to seek alternate sources for essential items.

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