The International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) have failed to agree upon and sign a new contract for the last six months. Since last month, demand planning and forecasting has been difficult, and I’ve had to raise prices to mitigate stock outs since many of our POs haven’t landed. The ports of Los Angeles and Long Beach are congested and there are chassis shortages because the union refuses to work. Some of my containers have been rerouted to Oakland, but ILWU workers walked off for three shifts there too, causing further delays.
I received an email just now saying that ocean carriers announced a $1,000 congestion surcharge per 40-foot container. I have dozens of containers sitting in the ports right now, and many of my SKUs are going to stock out if this inventory doesn’t land in the next week. I’ve already increased my prices to slow sales volume, but I can only do so much. One of the SKUs that is going to stock out in the next couple of days is a Key SKU, meaning that this SKU alone drives about 10% of the revenue streams of my business. Not to mention that Q4 is hands down the busiest time of the year in retail – The seemingly small scale disruption caused by the longshoremen’s attempt to apply pressure on management could potentially have a large negative impact on the economy and suppress sales during the holiday season.
In spite of how irritating this situation is, and the additional costs of time and money it is imposing on me and Overstock, I’m quite fascinated with these dynamics. It’s kind of interesting how big of a ripple effect labor slowdowns and contract negotiations between unions and employers can have. I can understand why businesses dislike labor unions, but I also see how important it is for labor unions to stand strong to negotiate better terms and conditions. If it weren’t for unions, we wouldn’t have the standard 8-hour work days, or 40-hour work weeks. We wouldn’t have family or medical leave, employer-based health coverage, or even weekends off. Labor unions have accomplished a lot of things that many of us take for granted.
Supply chain is much more interesting than I thought. 🙂 There are many different levers I can pull to keep my business running smoothly, but this union’s tactics are making it quite the challenge. I probably look like the biggest weirdo because I’m excited and jazzed up about something that is not necessarily a good thing for my business, haha but it’s really cool to see all these moving parts in action. I probably won’t be pissed off about this whole thing until I’m impacted more directly. 😛 Nonetheless, I hope that the ILWU and PMA are able to reach a compromise soon that benefits both parties.