Port squeeze threatens US retailers' holiday stocking plans

Fri Oct 24, 2014 11:53pm EDT
 
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By Nandita Bose and Lisa Baertlein

CHICAGO/LOS ANGELES (Reuters) - A shortage of transportation equipment and possible labor disruptions at ​the Los Angeles/Long Beach port complex, ​the nation's busiest, is delaying shipping containers for up to three weeks, threatening timely delivery to retailers for the holiday season.

The delays are affecting retailers including JC Penney Co (JCP.N: Quote), Macy's Inc (M.N: Quote), Kohl's Corp (KSS.N: Quote) Nordstrom Inc (JWN.N: Quote), American Eagle (AEO.N: Quote), Ralph Lauren (RL.N: Quote) and Carter's (CRI.N: Quote), according to three people with direct knowledge of the situation.

Retail giant Wal-mart Stores Inc (WMT.N: Quote), recently diverted 300 shipment containers to Oakland to avoid the congestion, one person said. Wal-Mart declined comment.

The problem stems from a shortage of trucking equipment, called chassis, but the National Retail Federation in a statement said protracted labor negotiations were an issue, too. The International Longshore and Warehouse Union declined comment on whether talks were having an effect.

Most retailers acknowledged the delays at the key ports for shipments from Asia, but said they did not anticipate product shortages during the holidays. Even so, any delay can derail a finely calibrated just-in-time inventory control system, making it costlier for retailers to put merchandise on the shelves.

"It's a domino effect," said Nate Herman, vice president of international trade at the American Apparel and Footwear Association. "When there is an interruption, things degenerate quickly."

With major port contracts up for renewal this year, retailers including Wal-Mart ordered early and prompted a surge of deliveries in June and July, port statistics show. But significant volume still arrived during the traditional August-October period that precedes the November-January holiday shopping season.

"There will be a scramble to restock shelves this holiday season," said Mark Hirzel, president of the Los Angeles Customs Brokers and Freight Forwarders Association. "The delays are running into two to three weeks."   Continued...

 
Container ships sit in berths at the Port of Los Angeles, California October 15, 2014.  REUTERS/Lucy Nicholson