“Container Cliff” Averted–at Least for Now

In Industry News, What's New by Jeff PrineLeave a Comment

Washington–Retailers and manufacturers have one less cliff to worry about the country falling off–at least for now. While Congress is supposedly working up to the ninth hour to avert the so-called fiscal cliff, a federal mediator announced Friday that the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) agreed to extend their contract negotiations for an additional 30 days, thus postponing what could be a crippling strike on all the East Coast ports from Maine to Texas.

Retail industry trade associations and others had feared that if the ILA went on strike over contract negotiations, the stoppage of imports such as apparel, accessories and footwear, would have stymied retail sales and worsened an already precarious U.S. economy. Coupled with the impending fiscal cliff, the “container cliff” would have been devastating to much of the U.S. economy.

Although the parties privy to the negotiations declined comment on their tentative agreement, federal mediators said one of the chief stumbling points on container royalties, used to supplement wages, had been resolved. The next step is for the dockworkers and their employers to reach a final contract by Feb. 6. That should be easier to accomplish some observers say.

Uncertainty Lies Ahead?

“We continue to urge both parties to remain at the negotiating table until a long-term contract agreement is finalized,” said Matthew Shay, ceo at the National Retail Federation (NRF).

“While a contract extension does not provide the level of certainty that retailers and other industries were looking for, it is a much better result than an East and Gulf Coast port strike that would have shut down 14 container ports from Maine to Texas,” Shay said. “A coast-wide port shutdown is not an option. It would have severe economic ramifications for the local, national and even global economies and wreak havoc on the supply chain.”

An impetus to come to some kind of agreement before the Dec. 29 container cliff deadline may have been due to the continued haggling in Congress over the fiscal cliff, which arrives Jan. 1, 2013.

Dockworkers and their employers may have extended negotiations to avoid competition with the fiscal cliff for federal attention, K.C. Conway, executive managing director at consultant Colliers International, told Bloomberg News over the weekend.

“The strategy just kicks the strike down the dock,” Conway said. “We just wait another 30 days and put retailers at risk for uncertainty about inbound spring/summer merchandise imports. Now manufacturers and retailers have to decide as to whether they should accelerate imports and absorb warehousing costs to avoid the uncertainty.”

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