The 2020 Mid-Year Economic Update_long

West Coast Ports Clear Backlog

Labor dispute resolution helps import volume return to normal.
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The West Coast port slowdown disrupted many distributors, with some calling it a minor hiccup for their inventory levels and others bemoaning it as an absolute disaster for their supply chains.

About four months after shippers and longshoremen agreed to a new labor contract and a month after the deal was signed, the ports are finally clearing their backlogs. Import cargo volume has returned to normal levels, according to the monthly Global Port Tracker report released late last week by the National Retail Federation and Hackett Associates.

“Despite some lingering labor issues, the volume of cargo and the rate of growth have both largely settled down,” said Jonathan Gold, NRF vice president for supply chain and customs policy. “There are still congestion issues to be dealt with, but we’re hoping to see reasonably normal back-to-school and holiday seasons this year now that the tensions of contract negotiations are behind us.”

Ben Hackett, founder of Hackett Associates, said a “stubbornly high” inventory-to-sales ratio and other economic factors will continue to affect cargo volumes through the summer.

“June is going to be a mixed month for the West Coast with volatility between the ports, but July and August are projected to see growth across the board," Hackett said.

As the ports return to normal operations, however, another potential labor dispute has emerged at some of the facilities where the majority of imports enter the U.S. The Wall Street Journal reported that some short-haul truck drivers who carry cargo containers from port terminals to nearby warehouses and distribution centers – a process known as drayage – are protesting their labor situation and asking for full-time employment status.

If those protests ramp up and lead to a strike, the drayage drivers, who are now independent contractors, could force another slowdown or even shutdown at the nation's busiest ports, again wreaking havoc for manufacturers and distributors.

“It’s probably the most invisible, mysterious link in the whole system,” Kevin O’Marah of supply chain consultancy SCM World, told The Wall Street Journal. “You get nowhere unless someone’s able to take your cargo from the port to the distribution center and get the ball rolling.”

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