Commentary: Summer of Discontent

Just when you thought it was safe to get back in the water, the theme music from “Jaws” ramps up in your ears. But in place of a huge shark fin rising above the waves, images of pacing picket signs marching across terminal gates play across your eyes. Replacing those thoughts of a peaceful summer with increasing cargo volumes and an improving business climate are recurring nightmares of crashing stock markets; European currency, debt and recession; Indian inflation; and China’s problem-of-the-month, whatever it may be.

As if that weren’t enough, Brazil’s economy is struggling, Argentina has found it appropriate to nationalize a major foreign oil company, Mexico’s drug-fueled violence seems to have no end, and Syria’s violence is too gruesome for words.

But wait, there’s more: Canada’s government stepped in to end a rail strike (always a crowd pleaser); an unconfirmed report said Donald Trump’s hair wasn’t born in America; most shipping lines will lose money again this year, but will continue to add capacity; and, in case you’d forgotten, we have an election coming up in November.

Whew! Summer has barely started, and I already have more than enough material for several old-fashioned “how I spent my summer vacation” essays.

With all of this turmoil and uncertainty, those in our industry will undoubtedly be focused, at least for the next 100 days or so, on what happens in our very own, very exciting reality show of the ILA-USMX version of contract negotiations 2012. After the excitement International Longshoremen’s Association President Harold Daggett generated at March’s TPM conference, I have no doubt most, if not all, of us had hoped the show was over and we could get back to our normal, boring routine of daily disasters, weekly crises, monthly work tsunamis, quarterly worries about results and the constant tinnitus buzzing in the ears of job security and what horrors await around the corner.

But this wasn’t to be. There are clearly more than two sides to every issue, and there are multiple issues each with its own complexities.

For those charged with ensuring your companies’ supply chains keep product flowing smoothly, consistently, predictably, economically and on time, however, the issues between the two antagonistic principals are inconsequential. Whether the contract is resolved by the Sept. 30 deadline or not, your companies and your customers expect your products to be delivered when, where and how they have already been committed.

This point needs to be repeated and emphasized: Your requirement to deliver merchandise against your commitments to your customers doesn’t change as the result of any labor disruption, work stoppage, lockout, strike, hissy fit or testosterone overload because two rival organizations that apparently don’t feel any obligation to you or your customers can’t come to grips with the idea that they have a responsibility beyond themselves.

The time remaining between now and the Sept. 30 contract expiration ought to be more than sufficient to complete the negotiations. It’s not as if anyone has demonstrated any kind of original thinking with new ideas, innovative concepts, radical departures from history or anything other than the old, tired mantras of job security, automation, jurisdiction, etc. They’re arguing about the same old issues they always argue about, while you’re obliged to make dramatic and possibly business-altering decisions about how to manage your product flow for the upcoming make-or-break time of year for your companies and America’s economy.

Forget about the decisions concerning product design, innovation and new product launches. Forget about the problems of pricing determination and market positioning. Forget about space commitments with carriers and delivery times. If the contract talks aren’t completed and guys don’t show up for work on Oct. 1, you’ve got bigger problems.

It’s a difficult and awkward situation. The more you look at it, the more complex it gets and the more problematic it becomes. Not ever having participated in this type of negotiation, I’m unaware of what goes on behind the scenes, and I recognize I may not know what I’m talking about. But I suspect the vast majority of those with logistics responsibility are in a similar position. What do you do? When do you do it? How do you explain it?

For all of our sakes, I hope what we’re seeing now can correctly be described as posturing and that the contract negotiations are resolved and the deal signed well before the deadline — and the sooner the better. There’s no doubt contingency planning must be the order of the day, just in case the worst happens.

Good luck and have a great summer, but those tans may have to wait until October or later.

Barry Horowitz is the principal of CMS Consulting Services. Contact him at 503-208-2232 or at barryh@cms-cs.com.
 

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