The West Coast ports dispute has been labeled, by the American Footwear and Apparel Association (AAFA), the number one trade barrier for the footwear and apparel industry last year. Now, footwear’s major stakeholders are understandably a little antsy as the East Coast ports are set to begin labor contract negotiations in mid-September for their contract that expires in 2018.
The history-making nine-month-long dispute between the International Longshore & Warehouse Union and their employers—at the 29 West Coast ports that run from California to Washington—wreaked havoc on the footwear and apparel industry last year and into 2015.
Brands such as Steve Madden Inc., Under Armour Inc., Skechers USA Inc. had to shoulder increased shipping costs in February to air-freight products. Then, even after a tentative agreement was reached later that same month, Macy’s, Wolverine World Wide Inc. and many others experienced losses in their first quarter earnings that they attributed to the stalemate.
The Federal Reserve has released a report, on July 2, 2015, with findings that show the West Coast ports dispute actually reduced first quarter 2015 U.S. Gross Domestic Product (GDP) by 0.2 percent.
The East Coast ports are not responsible for as much footwear and apparel cargo as the West Coast ports which encompass the largest, busiest port in the country, the Los Angeles Port, and the Port of Long Beach, the second busiest.
However, the AAFA says both ports’ contracts will expire in close proximity—the East Coast ports contract set to expire in September 2018 and the West Coast ports contract set to expire in June 2019. If something goes awry, the AAFA warns, the consequences could be major.
“If East Coast negotiations result in a multi-month slowdown, we could be in situation where ports on both coast will be effected at the same time,” Juanita Duggan, AAFA’s president, cautioned. “Our industry was seriously and negatively impacted by what happened in the last year on the West Coast.”
To prevent a similar fiasco, Duggan says a “number of systemic issues need to be reformed or resolved at the ports, with the port-labor system being one of them.”
“The bottom line is that the industry and the entire U.S. economy can’t afford a situation where there is full-stop at U.S. ports and commerce is halted entirely,” Duggan said. “That’s why supporting legislation like the PORTS Act and the Ports Performance Act—legislation that address issues at our ports—is an AAFA priority.”
So far, the East Coast ports negotiations appear to be off to an amicable start.
The International Longshoremen’s Association, AFL-CIO (ILA) and United States Maritime Alliance, Ltd. (USMX) announced on July 2 that they had concluded two days of “productive exploratory talks” on extending the current East Coast ports’ master contract ahead of the mid-September meetings.