West Coast Ports Bring in Mediator

US Port 2014
A federal mediator is headed to the West Coast to help resolve the contract dispute between workers and port employers.
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A federal mediator is headed to California.

The U.S. Federal Mediation and Conciliation Service announced late Monday evening it was sending a mediator to help resolve the months long disagreement between laborers and employers. The move is a welcome sign towards a possible resolution between the International Longshore and Warehouse Union and Pacific Maritime Association, which have been negotiating an expired worker contract since this summer.

The West Coast Ports are a crucial trade route between Asia and America, and the disruption has proven to be an expensive one for companies. Firms have been forced to sacrifice sales with delayed shipments or pay extra to deliver inventory on time by air. Either way, the expenses are hurting. Though the mediator isn’t a guaranteed fix to the problem, it’s viewed as a step in the right direction by many in the industry.

Analyst Camilo Lyon with Cannacord Genuity said he  was watching the situation closely. “I’m surprised it’s gone on this long really,” he said of the mediator. “We’ll watch how it plays out but it’s important to remember it’s temporary–this is just a transitory event for companies.”

American Apparel and Footwear Association president Juanita Duggan said the addition of a mediator was a welcome move.

“Nearly 50 percent of the clothing and shoes sold in the United States is imported through the Ports of Los Angeles and Long Beach, and the industry is having critical product deliveries delayed by three to four weeks as result of the labor dispute,” said Duggan. “With the import peak for Spring season for clothing and shoes rapidly approaching, it is crucial that President Barack Obama engage in intensive monitoring of the negotiations, and be ready to act immediately if conditions do not improve.”

Retailers too have been closely watching the conflict. DSW Inc. executives during its third quarter conference call alluded to delayed shipments in August and September, and said as a brand it was, like other retailers, in a bit of a holding pattern.

“We feel good about the level and currency of our inventory position right now and we are closely monitoring the West Coast port situation. Our higher level of pre-buys gives us some flexibility, but a work stoppage in the West Coast ports would have negative consequences for all U.S. retailers,” said Michael MacDonald, CEO and president of DSW.

Executives from Steve Madden, Ann Taylor and other big brands and retailers have expressed concern. Though the mediator doesn’t necessarily mean an immediate resolution, it is a first step.