West Coast ports slowdown affects tires, auto parts

Miles Moore, Senior Washington Reporter
Bloomberg News photo by Patrick T. Fallon
Cranes used to unload shipping containers stand at the Port of Los Angeles in San Pedro, Calif. West Coast ports account for more the $2 trillion in economic activity annually.

WASHINGTON (Feb. 27, 2015) — How did the protracted labor dispute at 29 West Coast ports affect shipments of tires and tire-related products?

Distributors of tires imported from Asia contacted by Tire Business indicated the ports slowdown had delayed shipments up to 90 days in some cases, and in others caused shipments to be rerouted to other U.S. ports.

The International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) reached agreement on a new, tentative five-year labor contract Feb. 20, in negotiations mediated toward the end by Labor Secretary Thomas Perez.

That agreement ended a slowdown that began as early as last May in ports ranging from San Diego to Tacoma, Wash., as some 20,000 dock workers demanded a new labor contract. The Port of Oakland, one of the most important container ports on the West Coast, was closed entirely for several days in February as negotiations continued.

During the January, shipments were down 29 percent at the Port of Los Angeles and 19 percent at the Port of Long Beach compared with January 2014, according to news reports.

In congratulating Secretary Perez, the ILWU and the PMA for reaching agreement on a contract, the National Retail Federation (NRF) noted that the West Coast port slowdown had a significant negative effect on those who depend on those ports for both shipping and receiving goods.

“The agricultural, manufacturing, retailing and transportation industries have all suffered due to the nine-month-long contract negotiations,” said Matthew Bray, NRF president and CEO. “If we are to truly have modern international trade, supply chain and transportation systems, we must develop a better process for contract negotiations moving forward.”

Department of Labor photo

Labor Secretary Thomas Perez

Tire makers and tire-related businesses said they still have substantial shipping backlogs because of the slowdown, and they don't expect the bottleneck to disappear quickly as management and labor continue to work out details of the tentative contract.

“Like many companies with global supply chains, Bridgestone is seeing delays in deliveries through the West Coast ports as the prolonged labor contract negotiations continue,” said John McLaughlin, executive director-logistics and supply chain management for Bridgestone Americas Inc.

“We are countermeasuring to the extent that we can by balancing our supply chain as appropriate,” he said.

Yokohama Tire Corp. has as many as 300,000 tires waiting to be unloaded at West Coast ports, according to Jeremy Kahrs, senior director of quality assurance, supply chain and logistics for the California-based tire maker.

It is difficult to say how long it will take to get those tires unloaded, but it could well take two weeks, maybe three, Mr. Kahrs told Tire Business.

“July was fairly normal, but we started to see a slowdown in August,” he said. “It was worst in October, when we had a backup of more than three weeks. November, December and January were better than September and October. But we don't know yet how bad February was because all that backlog is still in transit.”

When it became evident the slowdown would happen, Yokohama began building up its inventory to prevent supply shortages, according to Mr. Kahr. Even so, the slowdown did cause some product shortages in original equipment tires, all-season tires and some other product areas, he said.

However, the slowdown hasn't been disastrous so far for many Tire Industry Association (TIA) members, according to Wilson Beach, TIA director of membership.

“The slowdown hasn't trickled down to dealerships, because they can still get the inventory they need from distributors,” Mr. Beach told Tire Business.

Corona, Calif.-based tire distributor Tire's Warehouse Inc. (TWI) has seen delays of about 10 days to two weeks on average for tire shipments, according to TWI President Dan King.

“There was a combination of factors,” Mr. King said. “First, we'd have to get the tires unloaded, then we had to find truckers. Sometimes the trucks had to go to supply centers because there were so many tires being unloaded at one time.”

Like others interviewed for this article, Mr. King said he expects another 60 to 90 days to pass before shipping is back to normal.

TWI's suppliers worked closely with the company to make sure there was as little trouble as possible, Mr. King said. “They tried to expedite shipments when they could.

“We'd order a little more to cover shortfalls,” he noted, “but we never had to resort to having tires shipped to different ports.”

The West Coast slowdown had a huge potential impact on shipments, based on the number of tires imported to the U.S. from Asia.

In 2014, Asian countries exported more than 110 million car tires, 14 million light truck tires and 10 million medium truck tires, valued at more than $7 billion, according to the latest Department of Commerce statistics, along with hundreds of thousands of motorcycle, OTR, industrial, etc. tires.

Exports were affected just as badly.

Just ask Morry Jones, vice president of sales for Clackamas, Ore.-based exporter Fuller Brothers Inc., who summed it up in one word: “Horribly.”

Fuller Brothers, manufacturer of products to benefit commercial tire fleets — including the “Tire-Life” sealant and protectant formula — has suffered particularly during the slowdown, according to Morry Jones, vice president of sales.

“Some of our biggest customers are in Australia, South America, all around the world,” Mr. Jones said. “Our service time to our customers has been delayed by at least 30 days, and in some cases as high as 120 days.

“Eight full containers are still waiting to be shipped, and we don't get paid until the product arrives,” he said.

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To reach this reporter: [email protected]

 

 

 

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