Tirschwell: West Coast crisis as big as it gets

Tirschwell: West Coast crisis as big as it gets

We're now into a second week that no one in logistics is likely to forget any time soon. Not for what happened, of course, but for what hasn't happened - the fact that since Sept. 28 not a single container has been unloaded at a West Coast terminal at what is the height of the peak holiday importing season. This is a disruption to the U.S. logistics system that dwarfs those of the past decade: the meltdowns following the 1996 Union Pacific/Southern Pacific merger and the 1998 Conrail carve-up by Norfolk Southern and CSX; the multiple ocean carrier mergers, and, of course, the slowdowns staged by the International Longshore and Warehouse Union on the West Coast during contract negotiations in 1996 and 1999.

This is an event that at once will reveal the United States' reliance on foreign trade as well as its dependence on a well-functioning logistics system. As it stands today, that system is frozen. Cargo continues to move through Canada and the East and Gulf Coasts, but it's clear there is no ability to divert any more than a tiny percentage of the cargo originally destined for the West Coast. Like a ship captain who "commits" to a course down a waterway with the current behind him, cargo is committed to the West Coast, and cannot turn back.

Commodities such as avocados and other perishables are rotting on vessels and docks and grain for export is piling up at silos on the West Coast. Today is likely to bring news of the first plant closure due to lack of raw materials. Those problems make the stalled delivery of holiday merchandise seem minor, but that's happening also, and it will surely result in losses of tax receipts - about $1 billion per day in total losses to the U.S. economy if ports remain closed for a week, if estimates are accurate.

"We've got people who are just dying," said Bob Coleman, president of TLR Total Logistics Resource in Portland. "We have people who have manufactured inventory out there and can't touch it. We have exporters who have letters of credit that are going to be expiring."

The last West Coast strike, in 1971, lasted 134 days before it was resolved. This one, to be sure, won't last nearly as long, for a simple reason: it can't. The early 1970s were a very different time in the U.S. when it comes to international trade - we were, in a word, less dependent on it. And that brings us to the current situation.

It is becoming increasingly clear the Bush administration will have to enter the fray and attempt to resolve this crisis. On Oct. 1 ILWU President James Spinosa walked out of a meeting with a federal mediator dispatched to San Francisco to find a solution. It's not difficult to understand the ILWU's perspective. With a strike fund and individual earnings per member that average over $100,000 per year, ILWU members believe that time is on their side. They can ride this out for weeks, even months. The ocean carriers, who have ships that are anchored and therefore not earning revenues, are suffering every day this continues. The terminal operators are in the same situation. Go beyond them and you have thousands of importing and exporting companies across the country starved of merchandise and raw materials, and farmers whose perishables are perishing. The problem is that if the Pacific Maritime Association backs down now - and there is no indication they will - that would represent an enormous defeat and could set back by years if not decades their objective of improving efficiency at West Coast ports through the introduction of new technology and work practices.

It's hard to see the PMA backing down, having come this far, and that is why the action very quickly is shifting to Washington. Members of Congress are hearing from their constituents and are demanding that the docks be reopened. As it is, it will take weeks for the bottleneck created by the shutdown to be fully flushed out. The administration is obviously closely watching the situation; it's been a long time since a president of the United States spoke out about longshoremen and marine terminals the way Bush did Oct. 1. Pressure is growing on the administration to act, and they have no choice but to respond.

Bush's options do not appear to be many. He can invoke the Taft-Hartley Act, which hasn't happened in more than two decades, but there is no guarantee that longshoremen forced to return to work will operate at their normal levels of efficiency. They could simply "work to rule" and move half or fewer the number of containers they usually do. He could personally invite both sides to the White House and attempt to broker a solution. He could use rhetoric to shame the union into going back to work. Bush's calculations will inevitably take on political significance given the upcoming mid-term elections in November. A stand too strong against the union could damage support among certain constituent groups. Nevertheless, we appear to be entering a zone where the ILWU-PMA standoff has taken on importance well beyond the local labor dispute it once was. It will be subject to political crosscurrents that rarely intersect with the maritime community. And whatever takes place is sure to happen quickly.

Peter Tirschwell is editor-in-chief of JoC Week.