ASSOCIATED PRESS Ships loaded with hundreds of millions of dollars' worth of cargo idled in Los Angeles-Long Beach harbor yesterday after dockworkers were locked out in a dispute that could cost the nation an estimated $1 billion a day. A prolonged shipping stoppage may also cause huge losses for some Hawaii businesses.

Auto dealers expect
hot sales to fizzle if
disagreement drags on

Federal mediator to join dockworker talks

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By Russ Lynch
rlynch@starbulletin.com

Hawaii auto dealers, in the midst of one of the hottest sales seasons on record, suddenly are facing the possibility that it will slam on its brakes as a lockout shuts down West Coast ports.

Retailers of a wide range of goods say they have known for months there was a possibility of a strike, lockout or slowdown in mainland-Hawaii shipping, and they tried to prepare for it by building inventories.

But many could not afford to do much advance buying and storage, and are left with the hope that the worst that will happen is a series of shipping delays.

And aside from the traditional downside of air freight as a replacement for ships -- flying is not economical for bulky items that sell for low prices -- there is a new air freight negative: There just isn't much cargo space available.

Car dealers are worrying about missing out on a bonanza, as low interest rates continue to spur heavy sales. While there is no panic, other retailers admit to some concern about continuing product availability.

Eric Miyasaki, chief executive of Nissan Motor Corp. in Hawaii, said Nissan has about 350 vehicles "sitting on the pier in Long Beach" because of the Pacific Maritime Association's lockout of International Longshore and Warehouse Union workers along the West Coast.

A prolonged shipping stoppage "will make my situation very complicated," said Miyasaki, who added that he has no reason to believe there will be a lengthy halt. Like others with a dependency on mainland-Hawaii ocean freight, he doesn't know what will happen.

"We get about 70 percent of our vehicles from North America," by shipments from the West Coast, he said.

"Our sales are 25 percent over last year, and we are selling pretty much as best as we can," Miyasaki said. Any slowdown in shipping interferes with that pace.

Adding to the stress, he said, is that rental-car companies who held off on fleet replacement after Sept. 11 last year are now ordering cars.

At Toyota dealership Servco Pacific Inc., only one shipment has not moved from the West Coast, said Wes Kimura, Servco vice president of automobile strategies.

Servco does bring some vehicles in from Japan direct to Hawaii but still depends on West Coast ships for at least half its goods. "There really isn't an alternative," Kimura said, "and we are in a situation where we just don't have enough automobiles."

In some cases, customers have already been waiting for the car of their choice for a couple of months, and that can only get worse with a long shipping shutdown, he said.

"I just hope people use their heads and get something solved," he said.

It won't take very long for the damage to take effect, said Joe Nicolai, head of JN Automotive Group.

"If they have a West Coast strike that is longer than a week or two, we'll be severely damaged," Nicolai said.

At Hardware Hawaii headquarters in Kailua, the Ace Hardware franchise for Hawaii, Marketing Director Larry Lanning said the business typically keeps its inventory small and ships as close as possible to the date it needs the products.

"We are more heavily stocked than we normally would be," Lanning said.

"Probably we're not going to run out of stock evenly," he said. "There's thousands of items, and we really need to be in stock of all of them. It's no good having a counter full of bolts but you want this size of bolt and we don't have it."

Flying in products is not an answer for grocery retailers, said Times Super Market Inc. head Roger Godfrey.

"You can fly in some things but not many. I can't think of any real grocery items we would fly, some produce and maybe some meats," he said.

Besides, the days are gone when giant Boeing 747 jumbos and wide-body McDonnell-Douglas DC-10s filled the mainland-Hawaii skies with ample cargo space in their bellies, he said.

Like others, Times prepared for a slowdown but has been pleased by the lack of panic among consumers, which he hopes will stay that way, Godfrey said.

"We had a few little runs on things over the last 30 days," he said.

There is no reason to worry about Halloween, Godfrey said. Candy and other goods are already in stores.

Inventories, needs and shortages would vary widely, depending on the type of business, said Randy Yeager, president and chief executive officer of Retail Strategies Inc., a retail consulting and leasing firm.

"Some people might be able to back up inventory stuck on the docks with air shipments," he said.

Maintaining reserve in case of a shipping halt would be expensive for most retailers, Yeager said. Some have a longer turnaround in their supply and are accustomed to financing and warehousing bigger inventories as a normal course of business, he said.

In normal situations, retailers who are fortunate have a quick turnaround -- but they are the ones that get hurt worst in a shipping slowdown, Yeager said.

Pacific Maritime Association

International Longshore and Warehouse Union