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Wednesday, Feb 8, 2023
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Port Discord Starts to Seep Into OC

Most Orange County-based companies that rely on seaborne shipments have so far managed to work around the labor dispute that’s jamming West Coast ports.

Some have stocked up on inventory, while others are resorting to costly air shipments of critical merchandise.

All are counting on an end to cargo bottlenecks before supply chains begin to fray.

“We’re hoping for things to be resolved soon, so that everyone can get back to normal business operations as quickly as possible,” said Daniel Kelley, vice president of marketing at Fountain Valley-based D-Link Systems Inc., the North American unit of D-Link Corp. in Taiwan, which generates about $1 billion in annual sales of its routers and Wi-Fi cameras made in various markets in Asia. “While we altered our forecasting and inventory strategies as soon as we started realizing the slowdown mid-2014, we didn’t expect the delays to last as long as they have. Our proactive efforts have helped; however, they don’t completely alleviate the impact on our overall business the longer it goes on.”

Negotiations

Contract negotiations have dragged on for nine months between International Longshore and Warehouse Union, which represents 20,000 dockworkers at 29 ports, and the Pacific Maritime Association, which is comprised of 72 member companies, including shipping lines and terminal operators. Both have accused each other of instigating the port disruptions to influence contract negotiations.

Neither side reported much progress by midday Friday or after recently meeting with U.S. Labor Secretary Thomas Perez in San Francisco.

The West Coast ports, which stretch from Southern California to the Pacific Northwest, handle nearly $1 trillion in trade annually—about half of all maritime trade in the U.S., and more than 70% of imports from Asia.

Toshiba America Business Solutions Inc., the Irvine-based printing equipment and services unit of Toshiba America Inc., ships its products from China and Malaysia to the Port of Long Beach, which has seen its container cargo imports decline by 23.5% in January compared to the same month last year due to “lingering congestion.”

Toshiba in early January boosted its inventory of smart copiers by 3% after weighing several other options, such as using East Coast ports, including Savannah and Charleston, or facilities on Canada’s west coast.

Toshiba’s Test Shipment

Toshiba sent a test shipment last summer to Prince Rupert in Canada “to see how the supply chain worked, how long it took them to sail … to get on a rail and move either to our California warehouse or our Memphis, Tennessee, warehouse.”

That worked out fine, said Susan Wilson, the company’s vice president of supply chain management, but the Canada option got more expensive as “Long Beach started to get bad.”

“… Rates almost tripled, so we made the decision to buy additional inventory and continue to use Long Beach,” Wilson said. “Our warehouse is a little fuller than what we are typically used to, but with what I’m hearing from everybody else, that’s probably the least of my worries. … If this goes on for another 60 days, then potentially we may have some issues, but as of right now, we are in pretty good shape for year-end, which is in March.”

All four OC-based automakers get most of their vehicle deliveries through West Coast ports.

Mazda North American Operations in Irvine uses National City Marine Terminal near San Diego, as well as a port in Tacoma, Wash. Delays in unloading vessels—a common occurrence during the monthslong labor discord—usually last about a day, according to spokesperson Nick Beard.

Mazda has kept pace on auto shipments, but parts delivery for its dealer network has required some wrangling.

“At this point, Mazda North American Operations has been impacted, but we continue to take measures such as air-shipping parts to our dealers to ensure we meet our customer’s expectations wherever possible,” Beard said in an email. “We continue to monitor the situation, and our main focus remains on our customers and their needs.”

Hyundai

Hyundai Motor America Inc. in Fountain Valley said a small number of parts shipments have been affected by the ports’ congestion. It has “slightly” increased the number of air shipments, “with minimal financial and delivery impact,” said Jim Trainor, Hyundai’s senior group manager for product public relations.

The automaker uses ports at Port Hueneme in Ventura County, National City, and Portland, Ore., along with East Coast facilities in Philadelphia and Brunswick, Ga., for vehicles deliveries, which haven’t been affected by the dispute, according to the automaker.

James Hope, national manager for Irvine-based Kia Motors America Inc.’s products communications, said the automaker is “monitoring the situation, but there hasn’t been any material impact to our business at this point.”

Kia’s vehicles are delivered via Port Hueneme and Tacoma, Wash.

Mitsubishi Motors North America Inc. in Cypress also uses Port Heuneme for vehicles and has resorted to airlifts to get critical parts to its dealers. The company said its inventories are now sufficient to keep the automaker worry-free for the near term.

Raj Manufacturing

Some other companies, such as Raj Manufacturing LLC in Tustin, can sit back and relax because it has joined the recent trend of “reshoring,” or moving production back to the U.S.

“The port issues have caused havoc with retailers and suppliers in our industry,” said President Alex Bhathal. “Retailers large and small have voiced concern about shipping delays, and those delays could hamper stores’ swimwear setups for the critical spring break selling period. Due to the fact that we manufacture most of our products domestically, we’ve been able to ship our orders on time and complete. The advantages of our made-in-California manufacturing model shine through during disruptive times like this.”

Staff writer Chris Casacchia contributed to this report.

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