Toy Industry Advised to Prepare for Potential West Coast Port Shutdown in July

March 11, 2014 | Upcoming labor negotiations between West Coast dockworkers and their maritime employers could become contentious, resulting in a possible coastwide port shutdown or strike that would have a negative impact on the toy industry during the busy pre-holiday shipping season.

Contract talks between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA), expected to begin in May, are likely to heat up over an estimated $150 million in excise taxes owed under the Affordable Health Care Act for the health care plans of ILWU workers. If negotiations extend beyond the July 1st expiration date of the current contract, a shutdown or strike could occur on the West Coast, which handles an estimated 45% of all U.S. imports. A shutdown would cost the U.S. economy an estimated $1 billion per day.

To mitigate damages such as those experienced by the toy industry in 2012 when the ports of Long Beach and Los Angeles were closed for eight days, Toy Industry Association (TIA) members are encouraged to develop contingency plans for shipments scheduled to arrive through the ports in question. Disruptions may be at least partially avoided by conducting a thorough review of supply chains and options to divert cargo through alternate ports in Mexico or the East/Gulf Coast ports of the U.S.

“A stoppage at the West Coast ports would be highly detrimental to the U.S. toy industry, especially as companies begin to line up their shipments for the crucial fourth quarter,” said Carter Keithley, President and CEO of the Toy Industry Association (TIA). “We hope that all parties involved in the negotiations come to a quick resolution.”

TIA will keep members apprised of developments as the July 1st deadline approaches. Questions on this topic may be directed to Rebecca Mond, TIA director of federal government affairs.