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Buckle Up: Production Slowdowns and Labor Negotiations Loom Large in 2022

As annual Lunar New Year celebrations are set to begin on February 1st, it would seem that the weeks-long celebration and expected factory slowdowns would be cheered around the industry because it is the perfect time to clear all of the backlogs in the U.S.

However, many experts are only viewing this reprieve as the calm before a perfect storm. There are many reasons why industry leaders believe the post-Lunar New Year landscape is set to be very difficult. While factory shutdowns around this time of year are expected, many in the industry believe that massive amounts of travel could lead to more Covid-related pauses and slowdowns.

“What many people in the industry fear is a scenario similar to the beginning of the pandemic, where factory shutdowns were extended and then manufacturing operations are ramped-up to make up for lost time and meet consumer demand,” said Peter Hsieh, Regional Vice President of Sales and Marketing. “This likely scenario will create more backlogs at U.S. ports and make delays even longer than those currently being experienced – especially at West coast ports.”

ILWU contract negotiations looming in late spring are compounding experts’ fear. This year, negotiations could become contentious, shut down operations, and dramatically add to the long line of vessels waiting to berth and unload goods. While it may seem that potential labor issues will only affect West coast ports, importers must realize that a potential work stoppage may be supported by sympathetic East coast port workers and other groups of longshoremen around the country.

This means ports on the West coast that handle nearly two-thirds of all imports into the U.S. could be, at best, slowing down operations and making the import of goods into the U.S. extremely difficult. While there are other ports in the U.S. that may not have the same bottlenecks, shippers need to remember that they also do not have the capacity to handle the same amount of volume as L.A. – Long Beach and competition for space of these vessels will be fierce further stressing the East and Gulf coast supply chains.

“The ILWU is in a very strong position and right now they do not seem to be budging on any of their demands,” said Frank Costa, Vice President of Sales for OEC Group’s Northeast Region. “As a result of their current standing and the fact that no known conversations are taking place, it is possible that these complex negotiations will be drawn out, meaning that operations at L.A.-Long Beach could be severely interrupted for the foreseeable future. Therefore, it is critical for all importers to begin working with an experienced logistics expert and plan their year before it is too late.”
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