Looming port strike packs big surprise for importers.

With incoming shipments already delayed by shortages of longshoremen and railroad labor, importers found themselves behind the curve late last week as a looming clerical workers' strike threatened to shut down operations through much of the ports of Los Angeles and Long Beach.

As informal talks continued late last week, there were signs of progress toward a resolution. But at the same time, the union was in the process of setting a strike deadline of midnight July 9. If a contract wasn't in place by then, it planned to strike on the morning of July 10.

"The last thing we want to do is call a strike," said John Fageaux, president of the ILWU Local 63's clerical unit. "Both sides have been working hard to avert a strike. But at some point if we can't reach an agreement, that's what we're going to have to do."

By itself, a strike by the 750-member clerical branch of the International Longshore and Warehouse Union would only cause paper backups. But longshoremen working the docks have vowed to honor the picket lines, setting the stage for a broader port shutdown.

And unlike the 10-day port shutdown in 2002, when importers saw the labor dispute coming and avoided some of the pain with early orders, this potential calamity caught them completely off guard. (Also this time, the dispute is limited to local ports, not the entire West Coast.)

"It wasn't on anyone's radar screen," said Robin Lanier, executive director of the Waterfront Coalition, a Washington, D.C.-based importers trade group. "If you've got stuff on a ship that is already bound for L.A.-Long Beach, there is nothing you can do about it."

Possible delays

At this point, there are few options for shippers if a work stoppage does occur.

Even if there is available space at alternative ports, many importers said they will resist spending the additional time or money to divert future cargo.

"The problem caught me by surprise," said Jay Carroll, vice president of logistics for Cypress-based Toyo Tire USA Corp. "But most of us aren't willing to (divert) without come concrete evidence that there may be a significant disruption to our supply chains."

Added Christi Gallagher, a spokeswoman for Wal-Mart Stores Inc.: "It's certainly something we weren't aware of, so I wouldn't be able to speculate on what the impacts would be."

The clerical staff, whose three-year contract expired July 1, handles the documentation of containers moving through the ports for 16 terminals, local steamship operations, their agents and stevedore companies. (Some steamship lines, terminal operators and stevedore companies at the port are not involved in the negotiations, and would not be directly affected by any strike.)

Workers are most concerned about long-term job security they tear will vanish with new technology that allows port customers to bypass the staff and retrieve information themselves.

As of last week, the ILWU clerical staff were also seeking an unspecified increase to their pay, which starts at $33 per hour. The two sides agreed to a pension contribution increase to $135 per month per year of service by the end of the new contract, up from the current $100 level.

The steamship lines had offered a pay increase of 50 cents per hour in the first year, $1 in the second and 50 cents in the final year.

Stephen Berry, a partner with L.A.-based Paul Hastings Janofsky & Walker LLP, the lead negotiator for management, said he was befuddled by the union's demand for enhanced job security because steamship lines and their partners have already agreed to a no-layoff clause in the proposed three-year pact.

"I don't believe that concern is well founded," he said. "If the business grows, there wouldn't be a need for layoffs."

In the event of a work stoppage, a limited amount of cargo that has yet to leave Asia could be diverted to the smaller ports on the West Coast, said Lanier.

Also, lightweight and expensive items such as computer chips and high-end apparel could be shipped by air freight.

Alternative plans

The only importers in a moderately comfortable position are those that began using numerous ports alter the Sept. 11, 2001 terrorist attacks out of fear that a single port could be shut down.

"Today, shippers are more diversified in where their shipments come through," said Lanier. "Security is driving it. (But) you really need to start planning that months and months in advance. Having another disruption on top of these other (delays) is not good."

Carroll said he and other large importers are also paying an additional $50-per-container surcharge to have trucking companies store cargo in their container yards. This gets the cargo off the docks so it won't be delayed.

"It becomes a substantial incremental cost," he said, adding that Toyo Tire imports 25 to 30 containers worth of goods per day.

Berry said steamship lines and terminal operators would continue to operate during a strike, but he could not list any specific contingency plans that are in place.

"Everybody's concerned," said Capt. Manny Aschemeyer, executive director of the Marine Exchange of Southern California, which controls vessel traffic at the L.A. and Long Beach ports. "If there is a labor dispute, it could have a very serious and negative impact on these two ports."