According to the Pacific Maritime Association, the U.S. and regional West Coast economies rely heavily on trade through our West Coast ports, which is reflected in the following quick stats:
Retailers are now assessing the financial damage to their brands following the West Coast port shutdown and the tentative resolution of work that was recently agreed upon at 29 West Coast ports. The slowdown was the result of an impasse in negotiations between 20,000 port workers, represented by the International Longshore and Warehouse Union, and West Coast port operators.
The most immediate effects of the slowdown and the resulting backlog of shipments are being felt in perishable goods. Fruit and vegetables have a limited shelf life (even if they are refrigerated during shipment) so delays moving these goods from container ships to consumers increases losses for vendors due to spoilage.
We should also point out that retailers and vendors of seasonal goods are likewise facing a negative impact as a result of the slowdown. Retailers of footwear, furniture (particularly case furniture) and toys are likely to see their margins decrease. The full impact on these retailers may not be known for months as logistics and transportation networks struggle to cope with the backlog of goods.
We are anticipating margins and financial performance being negatively impacted as vendors struggle to deliver goods to their retail channels or retailers are forced to source goods from alternative vendors at a potential higher cost. We will begin to see the ramifications of the slowdown on financial statements released in the coming weeks.
On the other hand, retailers who sourced their products from other channels or received their products prior to the slowdown are better able to satisfy their customers' needs and are unlikely to experience significant negative impact to their margins. Yet, these retailers are largely the exception. Even if they correctly anticipated the slowdown, their options for proactively addressing the situation were limited because of the difficulty in changing shipping routes (from Long Beach, California to Galveston, Texas, for example) and the higher cost of shipping goods by air.
A positive to emerge from this - the slowdown has revealed the vulnerability of many retailers and vendors to disruptions in their supply chains. Going forward, we expect retailers and vendors to seek to diversify both their sourcing of goods and the ports they use to import those goods. This prescription is of little solace to those bracing for the economic impact caused by this slowdown.
If you enjoyed this blog post please consider sharing it with your social media networks. If you have a comment on this post, or a suggestion for a future post, please let us know at