Last year, the crush of holiday goods hit the ports of Los Angeles and Long Beach as early as May, moving up the ports’ peak season by about three months.
This year, all bets are off.
Surging apparel imports from China and a general rise in port traffic are raising concerns that the ports could again jam up sooner and in bigger numbers than in previous years. Then again, traffic could keep moving if the federal government clamps down on the apparel imports as some expect.
“There’s a lot of uncertainty,” admitted Beth Keck, director of international corporate affairs for Wal-Mart Stores Inc., one of the biggest importers at the ports.
Hedging their bets, some importers are already taking steps to bypass the congested ports by directing traffic elsewhere, while some are even exploring sourcing materials from non-Asian countries that don’t use the ports.
The peak season traditionally has spanned from August to mid-October, when retailers bring in their holiday goods. But last year, fearing congestion and port labor problems, Wal-Mart and other big box retailers ordered early and the ports were backed up by early summer.
Concern among retailers is even greater this year because the ports are projecting an overall 12% to 14% increase in container traffic, a problem exacerbated by a flood of Chinese garments that began arriving after World Trade Organization quotas were lifted Jan. 1.
Two weeks ago, the surge in apparel imports was cited by the federal government as a major contributor to a record $61-billion trade deficit in February. The trade surplus for China alone ballooned to $5.7 billion in March, up nearly 30% from the previous month.
In the first quarter of the year, Chinese textile and apparel imports were up 62% versus a year earlier, with cotton knit shirts and blouses up 1,250%, cotton trousers up more than 1,500% and underwear up 300%.
Those figures are cited as among the factors behind the U.S. apparel and textile industry shedding 12,200 jobs so far this year.
The quota lift has caused one textile maker to close up shop in Orange County. Fort Mill, S.C.-based Springs Industries Inc. shuttered its 200,000-square-foot Fullerton plant and laid off 270 workers in February.
Company officials said the maker of bed and bath products no longer could compete with cheaper products coming in from China and elsewhere, especially after the end of the textile quotas.
The Fullerton plant used to make bed comforters and other home furnishings. Springs supplies products to Wal-Mart Stores Inc. and Target Corp.
Safeguards for the textile industry could be in the works. The Commerce Department is allowed to limit imports on those items to 7.5% above annual growth, according to terms of China’s entrance into the World Trade Organization. The process requires 30 days of public input and 60 days of review from trade experts.
Hot Kiss Inc., a Los Angeles manufacturer of teen clothing, is among importers already experiencing delays of up to a week because of the high traffic at the ports.
“I’m struggling right now,” said Chief Executive Moshe Tsabag. “If things are late, (my retailers) want a discount. I deal with that every other day. And as we get into the surge of back-to-school goods at the end of May, June and July, things will be very congested.”
Tsabag said he is placing orders two to three weeks earlier, despite the fact that his teen clothes are fashion sensitive. But it’s unclear if the safeguards would have much of an effect, given that the apparel items at issue make up only a fraction of total port volume.
“Even if safeguards come in, it doesn’t solve the port problems,” said Ilse Metchek, executive director of the California Fashion Association.
Given that uncertainty, some local clothing manufacturers are looking to have their apparel sewn in countries other than China, with Mexico and Central America key suppliers. They offer the benefit of shipping across the borders by truck, Metchek said.
But it’s not an altogether appealing alternative, with thefts by drivers and hijackings by bandits being a significant problem. In addition, Mexico’s maquiladora factories have largely shifted upward from apparel manufacturing to higher value work, such as assembling cellular phones.
There’s also the question of what the Big Box stores and other retailers plan to do.
Gap Inc., which relies heavily on factories in Asia and Latin America, has developed flexible routing strategies that allow it to redirect shipments to alternate ports, said spokeswoman Amy Lund.
While Wal-Mart said it does not plan to change its sources of production, there are indications it is seeking a way around West Coast port congestion. Earlier this month, it opened a 20-acre distribution center in Oklahoma and announced plans for another distribution center in Indiana.
Greenberg and Myerhoff are staff writers with the Los Angeles Business Journal.
