Manufacturers and retailers are stockpiling goods and taking steps to bypass West Coast ports amid a labor dispute that the facilities' operators say threatens a shutdown disrupting more than 40 percent of U.S. trade.
Cargo piling up amid stalled talks with the International Longshore and Warehouse Union pushed the 29 ports to the brink of a "coast-wide meltdown," said James McKenna, president of the Pacific Maritime Association, the trade group of shippers and terminal operators. ILWU President Robert McEllrath said management was responsible for the congestion crisis and that the parties are close to a settlement.
Users of the biggest U.S. container ports have faced slowdowns and backups since mid-2014, with congestion worsening in November as unionized dockworkers reduced productivity at several locations, according to the maritime association. With prospects growing of a coast-wide shutdown, some shippers say they're shifting to backup plans.
"A lot of the suppliers will stop putting any sort of inventory on a ship now," said Neel Jones-Shah, president of JS Aviation Consulting and chief commercial officer for Los Angeles-based forwarder Able Freight. "They know it's going to get stuck at sea for weeks before it gets unloaded."
Japanese carmakers including Honda Motor Co. and Fuji Heavy Industries Ltd.'s Subaru are already sending some parts to the U.S. by air to bypass the slowdown. Airlifts began late last month on concern that the stalled labor negotiations could slow deliveries enough to hurt production, the companies said.
Air shipments are 15 to 20 times more expensive than by sea, said Satish Jindel, founder of SJ Consulting Group Inc., a Sewickley, Pa.-based shipping consultant.
"Everything that is going by ocean isn't going to convert to air," Jindel said. "But if they were sending four containers by ocean and they know they're going to get delayed by two weeks, they may send half a container by air to have something in the stores while the other three-and-a-half containers come by ocean."
The West Coast ports handled 43.5 percent of containerized cargo in the U.S. in 2013, according to the maritime association's annual report. Cargo moving through the ports accounts for about 12.5 percent of U.S. gross domestic product, the association said.