With dockworkers threatening to strike this weekend, businesses that rely on tens of billions of dollars worth of cargo flowing through the New York-New Jersey waterfront are starting to make costly contingency plans.
The International Longshoremen’s Association, whose grip extends across East Coast and Gulf Coast ports, is preparing to walk off the job on Sunday after failing to reach a deal with a group of shippers and port operators over container royalties.
The threat of a huge port shutdown has already led some supply-chain managers to divert their goods to other ports and ship them by rail or air instead.
“Customers have already begun diverting freight from Asia through the West Coast instead of waiting for a settlement,” one shipping company executive told The Post.
These contingency plans, however do not come cheap.
As more companies scramble to line up alternatives, freight costs will surge — and could even double, sources said.
For instance, customers who pay to ship goods from India to California instead of New York will have to pay an additional $1,000 “congestion fee” per container on top of the normal $2,000 per-container cost, according to Jonathan Gold, the National Retail Federation’s vice president for supply chain policy.
What’s more, there is the additional financial hit from transporting goods from California to the East Coast via rail or air, driving up prices for businesses across the board.
Gold said there is the potential for the extra costs to be passed along to consumers.
Ironically, some of the biggest national retailers moved much of their shipping to the New York and New Jersey ports after the West Coast waterfront lockout in 2002 — making them vulnerable this time around, a source said.
The Port of New York and New Jersey, the nation’s third-busiest port, rang up a record $208 billion worth of cargo last year and is on pace to top that this year.
Of course, many companies have not made contingency plans.
Ron Beckerman, the JFK branch manager of BGI Worldwide Logistics, said one of his customers considered flying video-game consoles from Singapore to New York but balked at the cost.
“Some people are postponing shipments and waiting it out,” he said.
About 60 percent of Beckerman’s business comes from international goods and 40 percent from domestic trucking.
“Think of everything we buy,” he said. “It’s all made overseas — food, department store merchandise, auto parts.”
Besides diverting freight to the West Coast, there will likely be a few non-union ports in Florida and Canada that will remain open. But those ports cannot handle the blocked flow.
The West Coast lockout in 2002, when the economy was on firmer footing, lasted 11 days and cost the economy an estimated $1 billion per day.
If there’s a strike, the longshoremen have said they will still unpack perishable commodities and autos, and handle passenger ships.
jkosman@nypost.com
A big ship storm
This article
A big ship storm
can be opened in url
http://expeditionnewster.blogspot.com/2012/12/a-big-ship-storm.html
A big ship storm
