JOC

In a sign of the growing threat of a strike by the International Longshoremen’s Association at ports on the East and Gulf coasts, financial analysts asked two of the largest U.S. retailers how they are preparing for the possibility.

Dollar General said it would move more products through its West Coast consolidation center if the ILA and United States Maritime Alliance failed to forge a new contract by the end of the month. The current contract expires Sept. 30. Negotiations between the two groups broke down Aug. 22, and ILA President Harold Daggett has warned a strike is likely.

The discount retailer feels “pretty good that we have it covered” if East Coast import traffic is disrupted, David Tehle, chief financial officer at Dollar General, said in a Sept. 5 earnings call, according to a SeekingAlpha transcript.

Phillips-Van, maker of Calvin Klein and Tommy Hilfiger, also has a contingency plan in place in which more products would be filtered through the West Coast, Mike Shaffer, the retailer’s chief financial officer, told investors on Aug. 28. “So, we are absolutely looking and monitoring closely,” he said.

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The International Longshoremen’s Association and East and Gulf Coast waterfront employers agreed to a request from the Federal Mediation and Conciliation Service to resume stalled contract negotiations.

The FMCS, a federal agency that handles arbitration and mediation of labor disputes, said the negotiations will resume the week of Sept. 17, less than two weeks before the Sept. 30 expiration of the coastwide master contract between the ILA and United States Maritime Alliance.

“Due to the sensitivity of this high-profile dispute and consistent with the agencies’ longstanding practice, we will not disclose either the location of the meeting or the content of the substantive negotiations that will take place,” the FMCS said on its Web site.

Negotiations between the ILA and USMX broke down Aug. 22.

"We welcome the opportunity to resume negotiations and are grateful to the FMCS for its assistance," ILA President Harold Daggett said through a spokesman.

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Capacity going through U.S. West Coast ports will be in short supply if the International Longshoremen's Association strikes or is locked out at East and Gulf Coast ports, according to the world’s largest container line.

Thomas Knudsen, Maersk Line’s Asia Pacific CEO, said shippers seeking to divert shipments into West Coast ports would find capacity scarce. “Our utilization into West Coast ports is already in the mid- to high 90s so there is almost no capacity left.” Knudsen said. “We can take a little more, but not a major overflow.”

The strike or lockout by the ILA could begin at the start of October when its existing contract with terminal operators covering ports from Maine to Texas, represented by the United States Maritime Alliance, comes to an end.

Maersk Line was one of a number of carriers to file precautionary congestion surcharges with the Federal Maritime Commission in case of a strike.

“Should there be no labor action and subsequent congestion disrupting operations, this tariff filing will be nullified,” the carrier said.

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Organizations representing apparel importers have written to the International Longshoremen’s Association and United States Maritime Alliance, urging them to resume stalemated negotiations for an East and Gulf Coast dockworker contract.

The American Apparel and Footwear Association, the Travel Goods Association, Gemini Shippers Association, and the Fashion Accessories Shippers Association urged the ILA and USMX to resume negotiations, which broke off Aug. 22.

The groups said their members are concerned about the possibility of a work stoppage or slowdowns at the ILA-USMX contract’s Sept. 30 expiration, and that their products require on-time arrival to meet customer demand and avoid costly chargebacks from retailers.

“This need for certainty and reliability becomes even more important during the months preceding the holiday season, when all levels of the supply chain increase production in anticipation of the busiest shopping period of the year,” the letter said.

The groups said shippers already are worried a work stoppage “would have dire consequences for the already-struggling U.S. economy and the consumer population as a whole.”

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