Retailers' anxiety levels are rising as gridlock grinds on with contract negotiations between West Coast dockworkers and port terminal operators.
It has been a long nine months for those dealing directly, or indirectly, with the lack of a West Coast port contract, and after a temporary shutdown over the weekend, retail lobby groups and consultants are assigning potential costs to the issue.
According to a Kurt Salmon analysis, congestion at West Coast ports could cost retailers as much as $7 billion this year. That congestion cost comes from a combination of the higher price of carrying goods and missed sales due to below optimal inventory levels.
A prolonged shutdown of course would be worse—and it would hit more than just the retail community. The National Retail Federation and National Association of Manufacturers estimate a 10-day shutdown could levy a $2.1 billion per day hit to the overall economy as about half of the nation's international imports come into the country via the West Coast ports.
Without naming names, Kurt Salmon retail supply chain strategist Frank Layo said a number of retailers have begun to shift shipments to East Coast ports, or are buying extra inventory in advance to mitigate inventory disruption, though those measures are only temporary Band-Aids for a potentially large wound.
The cost to retail could get exponentially worse going forward. Layo said congestion coupled with rate increases from import growth, and retailers could be facing $36.9 billion more in 2016 than 2014's baseline costs.