Retailers continue to plan for supply chain disruption

Potential delays caused by labor contract negotiations would impact retail supply chains

At the NRF Supply Chain 360 conference and expo, you can explore the modes and methods needed to build a stronger, more sustainable supply chain and ensure resiliency in challenging times. Learn more about the conference, held June 20-21, 2022, in Cleveland, here.


One thing we have learned over the past couple of years is that the supply chain is never “calm.” While many expected the supply chain would begin to recover and return to “normal” in late 2022, most now agree that will not be the case. There are many issues beyond the control of those that own and operate the system, including ongoing COVID-19 outbreaks, that continue to impact overall recovery.

Congestion at West Coast ports, including the Ports of Los Angeles and Long Beach in particular, has lessened, thanks largely to a significant decrease in the number of vessels waiting to berth and unload. Part of the reason is the slowdown from Lunar New Year holiday closings at factories in Asia, but also the ongoing COVID-19 lockdown in Shanghai. Even with decreasing volumes, there are now issues with rail moves from the ports.

Supply Chain 360
Join us at NRF Supply Chain 360 to take a look at the methods needed to build a stronger, more sustainable supply chain.

While West Coast congestion has eased, congestion at critical East Coast ports has increased. As NRF’s Global Port Tracker forecasts, imports will continue to grow over the next few months, especially as we enter the all-important peak shipping season for retailers. Ongoing strong consumer demand will continue to impact the supply chain, as will other economic variables.

Many uncertainties and disruption issues can’t be controlled, but there is one major potential disruption event that can hopefully be avoided this summer: The West Coast ports contract between the International Longshore Warehouse Union and the Pacific Maritime Association is set to expire on July 1. NRF’s members and other stakeholders that rely on the West Coast ports are hoping the negotiations do not result in disruptions at the ports like those seen with previous negotiations.

In advance of the talks, NRF sent a letter to the two parties encouraging them to begin early in order to reach a contract agreement that would ensure continued cargo growth for the region.

“NRF’s members are continuing to adjust to the ongoing supply chain disruptions,” NRF President and CEO Matthew Shay said in the letter. “Any kind of additional disruptions at the ports would add further costly delays to our members’ supply chains and likely add to inflation concerns and further threaten the economic recovery.”

The ILWU and PMA have announced they will begin their negotiations, which will cover all 29 West Coast ports, beginning May 12. Everyone, from the union and management to the Biden administration, knows what is at stake. When the contract was last up in 2014, negotiations dragged on for nine months and resulted in slowdowns and congestion at the ports that significantly impacted retail supply chains.

Retail supply chain

Take a look at recent supply chain practices within the retail industry.

Prior to the 2014 negotiations, NRF joined with the National Association of Manufacturers to conduct a study evaluating the national impact of a West Coast port stoppage due to negotiations. The study found that a five-day shutdown would have cost the economy close to $2 billion a day. An outright shutdown was avoided that year. But, almost a decade later, the impact of a shutdown could be far larger given the growth in trade since then, especially with the surge in imports over the last two years.

Recognizing the potential for disruption, NRF members are already putting mitigation strategies into place. These efforts include bringing in cargo earlier than normal, shifting cargo to alternate ports including the East Coast, Gulf Coast or Canada, and using air cargo. These moves all come with their own challenges and costs, especially as we continue to see issues with capacity, equipment availability and labor.

Through it all, retailers will continue to focus on efforts to improve their supply chain operations and ensure consumers will continue to have goods available to them wherever they shop.

Learn More

Related content

Micro-fulfillment: The luxury of last-mile delivery
 
Delivery
Join NRF, Attabotics and Accenture on Thursday, May 26.
Read more
Tame inflation through tariff relief
 
Inflation
Tariffs cost the average American household more than $1,200 in 2020.
Read more
How ports can untangle the supply chain snarl
 
Port of Cleveland
Port of Cleveland President and CEO William Friedman on the next supply chain challenge.
Read more