Lack of progress in contract negotiations between a powerful union of West Coast port workers and representatives for owners of shipping lines and terminal operators has importers across industries in the United States increasingly worried about substantial supply chain disruption.

On Wednesday, June 8, the American Apparel & Footwear Association (AAFA), the Retail Industry Leaders Association (RILA), and the Travel Goods Association jointly sent a letter to President Joe Biden urging his administration to become involved in the contract talks between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) to ensure “the needs of both the workers and the ports are met and further backups, delays and inflationary costs are avoided.”

A cargo terminal at the port of Los Angeles.

The groups are worried that work slowdowns or stoppages at 29 critical West Coast ports will occur if the talks become more contentious and drag on past the current contract expiration date of July 1.

“We urge you to encourage both parties to remain at the table until an agreement is finalized because even a relatively brief port slowdown or shutdown would compound current supply chain challenges and cause long-lasting damage to consumer confidence and American businesses,” the letter to the Biden administration read.

Stoppages or slowdowns, particularly at the ports of Los Angeles and Long Beach, through which about 40% of imported cargo containers flow, could cause cargo to back up at ports and ships to remain anchored out in the water, unable to deliver goods. Such consequences can inhibit the ability of importers, including those in the promotional products industry, to restock inventory, leading to product shortages and stoking higher prices.

“There is less than a month before the contract expires and if both parties don’t remain at the table and the current negotiations don’t make meaningful progress toward an agreement, the consequences will exacerbate existing supply chain challenges,” the letter from the AAFA and others read. “This will be to the detriment of the U.S. economy, American importers and exporters, the tens of millions of workers they employ, and the hundreds of millions of consumers they serve.”

West Coast port worker contract talks, which have potential to significantly impact global supply chains in the #promoproducts industry and beyond if they go awry, have been temporarily suspended. When will they resume? https://t.co/z52nDAR0fc @ASI_MBell @Tim_Andrews_ASI

— Chris Ruvo (@ChrisR_ASI) May 25, 2022

The groups sent the letter after insufficient progress in negotiations led talks to be suspended for 10 days. Negotiations resumed on June 1, but the sides reportedly remain at odds over key issues, such as automation. PMA wants to enhance use of automation at ports to speed efficiencies, but union workers see at least some of that tech push as a threat to jobs.

Top promo products executives have said that slowdowns or stoppages at West Coast ports would affect the industry.

“Any significant slowdowns or stoppages would have a very significant impact on our ability to import product and maintain inventory,” said Jeremy Lott, CEO of Issaquah, WA-based SanMar (asi/84863), promo’s largest supplier, and a member of Counselor’s Power 50 list of the industry’s most influential people.

“While we use ports on the West Coast, the Gulf and the East Coast,” Lott continued, “the West Coast ports are incredibly important to Trans-Pacific trade and would have a significant impact to our business and the industry in general.”

In its letter, the AAFA, RILA and TGA called on the Biden administration, PMA and ILWU to use the contract negotiations as a chance to improve the nation’s port/importing operations.

“We also hope that the administration, the PMA and the ILWU will leverage this opportunity to address systemic operational challenges at U.S. ports, supporting infrastructure modernization and enabling transparency, data-sharing and interoperability to facilitate end-to-end visibility,” the letter said. “These important issues must be addressed to strengthen U.S. competitiveness, to ensure our supply chains are fully prepared to support continued economic growth, and to mitigate potential disruptions in the future.”

Survey shows widespread concern that a looming surge in import demand could send freight rates soaring, trigger delivery delays and cause big backups at ports. https://t.co/iC3Ol3TVw0 #promoproducts

— Chris Ruvo (@ChrisR_ASI) May 19, 2022

As of this writing, the Biden administration had not responded to the letter. Earlier this spring, U.S. Labor Secretary Marty Walsh said the administration aimed to observe the negotiations and only become involved “if we have to,” asserting that it’s pivotal to prevent further port disruption.

The COVID-19 pandemic has thrown global supply lines into disarray – a mess that has included large back-ups of cargo and ships at ports domestically and overseas, including in key hubs in China. While the domestic port situation has improved of late, there’s concern that challenges could again intensify over the summer as U.S. companies ratchet up importing to stock up on products for back-to-school and the holiday shopping season. Port slowdowns/stoppages would exacerbate any challenges that might be experienced.

Some analysts and sourcing experts believe the supply chain issues are here to stay until the effects of the pandemic dissipate. A recent analysis from Citi, a New York City-headquartered multi-national investment bank and financial services company, said as much.

“Bottom line, we find that supply chain pressures have proved to be more persistent, and apparently deep-rooted, than we had expected even a few months ago,” strategists led by Global Chief Economist of Citi Research Nathan Sheets wrote in a note. “And the Russia-Ukraine conflict seems to be further amplifying the stresses. Given these realities, any hopes of near-term improvement in supply chain conditions have been shattered. The challenges in the months ahead look to be as acute as at any time over the past two years.”