National retailers Wal-Mart Stores Inc., Gap Inc. and other U.S. retailers are preparing for a shutdown of West Coast ports as shipping companies and dockworkers have yet to agree on a new contract after eight weeks of talks.
prepare backups
in case of strike
In Hawaii, Wal-Mart ramps up
inventory, but Daiei doesn'tStar-Bulletin staff and wire
"We have accelerated deliveries," said Tom Williams, a spokesman for Wal-Mart, the world's largest retailer. He declined to comment further. A Salomon Smith Barney report said Wal-Mart has three to five weeks of inventory stored away in case of a port shutdown.
Retailers are bringing in goods early, sending cargo to the East Coast and arranging for air shipments in case of a strike or lockout at the California, Oregon and Washington ports, Salomon Smith Barney said in the report. A 10-day shutdown of West Coast ports may cost the U.S. economy as much as $19.4 billion, according to a study by consulting firm Martin Associates.
Mainland retailers are worried about foreign imports, since the West Coast is the landing point for the biggest suppliers, businesses in Asia. Hawaii gets most of its goods from the mainland by sea so it can be hit not only by a cut in supply of imported goods coming back from their first landing in California but by American-produced goods as well.
But there have been few signs of concern in the islands, where it is widely understood that as long as the two sides continue to talk there may be no immediate worry.
The problem does exist in Hawaii, though, said Bryan Wall, manager of the Wal-Mart store in Mililani. Wal-Mart locally has been aware for several months of the possibility of a waterfront slowdown or stoppage and has been building inventory of some products just in case.
"We've built up on things that people might buy up," such as paper products, he said. "It's not a worry, but if something like that does happen we're prepared for it," he said.
Matson Navigation Co. and CSX Lines, the two major carriers of ocean freight between the West Coast and Hawaii, have reported freight volume increases in recent weeks, apparently related to strike worries.
Daiei USA, a major Hawaii retailer through its Daiei stores, is taking it easy, not increasing its stocks and not worried about the docks, said its general manager, Herb Gushigima. There is no evidence of customers buying more because they are worried about supplies, he said.
Mainland importers are worried about a potential disruption.
"If it's short it'd be an annoyance," said Charles Woo, chief executive of Megatoys Inc., a Los Angeles-based toy importer and wholesaler. "If it's more than just a few days, it'd be a serious disruption."
Woo said Megatoys is importing Halloween merchandise ahead of schedule and has filled its warehouses. The company imports about 1,000 40-foot containers from China a year, he said.
The Western ports handle about 42 percent of U.S. waterborne trade. U.S. retailers rely on the ports to receive Asian-made goods including electronics, clothes and household items.
"Everybody is concerned," said Salomon Smith Barney retail analyst Carol Murray. "The back-to-school season is very important to all retailers."
Imports through the Port of Los Angeles, the busiest U.S. container port, rose 35 percent in May from a year earlier and are up 23 percent for the year. The increase comes as retailers bring in fall merchandise earlier than usual, port spokesman Al Fierstine said.
Of the $40.6 billion in annual apparel imports to the U.S., 52 percent arrives through the West Coast, the Salomon Smith Barney report said. The peak shipping season for most apparel retailers runs July through October, the report said.
Gap spokeswoman Stacey Krum said the largest U.S. clothing retailer gets about 50 percent of its imported merchandise by way of the West Coast ports. The San Francisco-based company may reroute boats if the ports shut down and will bring in goods by air if necessary, she said.
Limited Brands, which operates Limited, Express and Victoria's Secret stores, has been preparing for a possible port shutdown for nine to 12 months, the Salomon Smith Barney report said. The company has sent merchandise to Miami and will ship by air if the ports close, the report said. Limited spokesman Anthony Hebron declined to comment on the report.
Possible slowdown
Members of the International Longshore and Warehouse Union, which represents about 10,000 dockworkers, are working under terms of a contract extension. The union has been in talks since May 13 with the Pacific Maritime Association, which represents shippers.The carriers will consider a shutdown of the ports if the union slows work as it did during contract negotiations in 1996 and 1999, Steve Sugerman, a spokesman for the Pacific Maritime Association, said a week ago.
The union denies that it has slowed down work during previous negotiations, spokesman Steve Stallone said. Both Stallone and Sugerman declined to comment on the progress of the negotiations.
Sears, Roebuck & Co., the largest U.S. department-store company; Target Corp., the second-biggest discount retailer; and Nike Inc., the world's largest athletic-shoe maker, have all made plans for a port closure. Company representatives declined to talk specifically about those plans.
"The last time this happened, in 1999, we had extensive plans in place," Sears spokeswoman Jan Drummond said.
West Coast ports handled about $310 billion in trade in 2000, mostly from imports.
Bloomberg News and Star-Bulletin reporter
Russ Lynch contributed to this report