West Coast Ports Dispute and US Economy

Maritime Activity Reports, Inc.

February 14, 2015

Image by Pacific Maritime Association

Image by Pacific Maritime Association

 A face-off between economists on the cost of West Coast port slowdown on U.S. economy. Vital shipping ports on the West Coast are closing amid a labor dispute between shipping companies and longshoremen.  Will the shutdown lead to major losses for businesses and the U.S. economy as a whole? 

A section of economists and trade experts say that a shutdown of 29 West Coast ports closures would have very little effect on the broader U.S. economy as the trade of goods through U.S. ports represents only a fraction of the nation's total economic output.
The situation promises to create headaches for scores of U.S. companies, including McDonald’s Corp., Macy’s Inc., ConAgra Foods Inc. and Levi Strauss & Co. West Coast ports account for almost half of U.S. cargo, and the slowdown has already hampered both imports and exports, reports Bloomberg.
The report says that consumers also are seeing the impact - - whether it’s the rationing of French fries in Japan or shortages of some toys at Christmas.
What does it all mean for major U.S. retailers? Possibly multi-billion-dollar trouble. CNBC, citing a Kurt Salmon analysis, reported this week that congestion at West Coast ports could cost retailers as much as $7 billion this year. For one thing, congestion means a greater scarcity in carrying goods and with scarcity comes higher costs. 
But, port slowdowns is not heavily affecting big automakers - Detroit automakers are not experiencing any “significant” problems in shipping or production due to labor disputes that have slowed shipments at dozens of ports on the West Coast.
Officials for General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV on Friday each said their respective companies have either made alternative arrangements for shipping or are not experiencing any major shortage of parts or shipping problems.
A shutdown would create interruptions and higher costs for businesses relying on trade with Asia, but experts said those losses would be offset by greater demand at other ports or for airlines moving freight.
Meanwhile, pressure is building on President Barack Obama to intervene in the labor dispute at 29 West Coast ports.
On Capitol Hill, 16 members of Congress, both Republicans and Democrats, held a news conference to urge Obama to step in if the Pacific Maritime Association, which represents terminal operators, and the International Longshore Warehouse Union don't reach a labor agreement soon.
For the U.S. economy, the West Coast port slowdown is "putting sands in the gears of an engine that we're trying to rev up going forward," said NRF Chief Economist Jack Kleinhenz.
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