Los Angeles port problems threaten holidays for retailers

Los Angeles port problems threaten holidays for retailers

Labor disruptions, equipment shortages create concerns about the availability of holiday merchandise.

Transportation equipment shortages and the prospect of labor disruptions in Los Angeles is causing delays for shipping containers and raising worries among retailers about deliveries for the holidays, according to Reuters.

In particular, JC Penney, Macy’s, Kohl’s, Nordstrom, American Eagle, Ralph Lauren, and Carter’s are heavily affected by problems with shipping out of the busiest port in the United States. Walmart diverted 300 shipment containers up north to Oakland to dodge the problems.

A shortage of trucking equipment is driving the concerns, but slow labor negotiations are becoming a problem as well.

Retailers so far are denying that there is a possibility of disruptions over the holidays, saying that the issues mostly concern shipments from Asia. However, delays place a significant risk on their just-in-time inventory control system, raising costs to deliver merchandise and cutting into critical profits over the fourth quarter.

Ports have major contracts to renew this year, prompting retailers such as Wal-Mart to order early, but there is still a lot of volume to be delivered through October that will help fulfill orders for the holiday shopping season.

To mitigate the problem, some retailers are attempting to reroute merchandise to other ports, and some are sending products by air.

There are several factors affecting the delays. For one, imports jumped more than 10 percent last month compared to the same time a year ago. Shortages of truck trailers and drivers has left goods sitting at the dock. And present-day terminals can’t handle the large volume of goods as ships get bigger and increase their capacity.

The Soutern California port handles 40 percent of all U.S. imports, and is facing the worst delays since 2004 when the port adopted a new system.

Problems should ease by the end of the month as the busiest shipping season subsides, analysts believe.

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