In light of the postponed negotiations between the International Longshoremen’s Association and the United States Maritime Alliance, Ltd., the Retail Industry Leaders Association (RILA) sent a letter, urging the two parties to continue negotiations in order to reach a contract agreement before the September 30 deadline.
“As negotiations falter, retailers are urging both sides to get back to the negotiating table and avert what would be a disastrous strike this fall. A disruption of this magnitude would be devastating to the retail industry and would have severe consequences for the U.S. economy,” said RILA president Sandy Kennedy.
The potential strike would affect 14 East and Gulf Coast ports, which would force retailers to redirect their supply chains during the crucial period before the holiday shopping season. The disruption would impact the entire industry during a peak shipping season and seriously impede the flow of commerce. Supply chain changes of this magnitude are undesirable to retailers due to the time they take to both implement and reverse.
“We understand the negotiations themselves have many complicated components that need to be addressed, but we’re also aware of the potential short and long term consequences that will occur if cargo is diverted from the East and Gulf Coast ports,” said Kennedy. “The negative impact a strike would have on retailers and our overall economy cannot be overstated.”
The full text of the letter is below.
August 29, 2012
Mr. James A. Capo
Chairman and Chief Executive Officer
United States Maritime Alliance, Ltd.
485C US Highway 1 South, Suite 100 Iselin, New Jersey 08830
Mr. Harold J. Daggett
International Longshoremen’s Association
5000 West Side Avenue, Suite 100
North Bergen, New Jersey 07047
Dear Mr. Capo and Mr. Daggett:
On behalf of the members represented by the Retail Industry Leaders Association (RILA), I urge you to return to the bargaining table to avoid a port labor disruption which will significantly impact the customers on which you both rely. You may remember that I wrote to you earlier this summer requesting your leadership to help prevent the potential shutdown of port activity along the entire Eastern and Gulf seaboard. While we saw progress in July it has become evident that these discussions are quickly faltering and will likely result in a strike this fall. We find this development incredibly discouraging. We are extremely disappointed as a potential disruption would be devastating to the retail industry and could cause lasting damages to the U.S. economy.
By way of background, RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilitates and distribution centers domestically and abroad.
If an agreement is not reached by the September 30th deadline, the disruption that seems imminent would impact the entire industry by seriously impeding the flow of commerce during a peak shipping season. RILA’s members are some of the world’s largest supply chain users and they rely on an efficient transportation system every day of the year. With the upcoming holiday season fast approaching, RILA and every retailer we represent is dependent on both of your organizations to meet on a final agreement. We understand the negotiations themselves have many complicated components that need to be addressed, but we’re also aware of the potential short and long term economic consequences that will occur if cargo is diverted from the East and Gulf Coast ports.
As the negotiations continue to breakdown, it is becoming more and more evident that the threat of a strike is growing stronger. This culminated with today’s news cycle reporting that a vote to strike has already occurred. In preparation, retailers already have contingency plans in place and are beginning to redirect their supply chains in order to allow adequate lead-time to ensure that customer needs can continue to be met.
Moreover, as the expiration date of the current contract draws nearer, the shifting of freight to alternative ports will continue to materialize as it will be allocated to more dependable gateways. Due to the timing of ocean transit to the east coast, retailers must make decisions to redirect cargo now. Furthermore, a last minute settlement could significantly reduce cargo to these ports for weeks or even months. Supply chain changes of this magnitude are undesirable to retailers due to the time they take to both implement and reverse. However, our members must consider the needs of their customers and businesses as they navigate this difficult situation.
It is for these reasons, RILA and our member companies strongly encourage both parties to work to continue their efforts to swiftly negotiate a viable agreement. While we adamantly urge you to return to the table, it is crucial that a disruption of business is prevented. Therefore, as a last resort we would advise a 45 day extension to allow merchandise to arrive for the holiday season.
The current activity that exists at the negotiating table is discouraging and we urge both parties to actively consider the potential harm a disruption would cause to the shipping industry and our economy. We are hopeful that an agreement will ensue in the coming days. If you have any questions or concerns, please contact Kelly Kolb, vice president, government affairs at (firstname.lastname@example.org) or 703.600.2064.
Sandra L. Kennedy