Although a tentative agreement has been reached to settle a lengthy loading and off-loading slowdown among 20,000 dock workers at 29 U.S. West Coast shipping ports – which account for 40 percent of the nation’s incoming international cargo – UPS is projecting that it will take four to five months before wharf operations return to normal levels.
|Want more? Enjoy a free subscription to Aftermarket Business World magazine to get the latest news in the Automotive Aftermarket Industry. Click here to start your subscription today.|
As with other industries, the situation continues to create “risk and uncertainty” for aftermarket businesses dependent upon timely deliveries: Just-in-time manufacturing cycles are jeopardized, parts are delayed in reaching repairers’ and retailers’ shelves, seasonal stocking and purchasing trends are disrupted, and cash flow issues can arise amid the lingering impact.
And even with alternative shipping methods being implemented to ease the assorted logjams, the problems associated with backed-up shipments remain. UPS notes that a single ocean-going vessel’s cargo of containerized goods would fill close to 550 747 airplanes.
Logistics expert Ioana Mazare is the automotive marketing manager at UPS, where she works with OEMs and aftermarket manufacturers, distributors and retailers. She recently answered a series of questions for Aftermarket Business World relating to the dilemma on the docks:
Q: Are you seeing companies change their shipping plans because of the West Coast port slowdown? If so, what are they doing?
A: Yes. UPS has been working with our customers since early 2014 to develop contingency plans in case the slowdown occurred and we’ve been putting those plans in action since delays began taking place. These contingency plans vary by customer, but typically use a combination of ocean, rail and truck transportation that balances inventory levels, fill rates and cost. In some cases, automotive companies are augmenting with air freight to meet consumer demand and maintain high levels of customer satisfaction.
Automotive aftermarket businesses should carefully evaluate how ocean shipping delays are affecting, or may affect, their business. Sometimes the optimum solution involves looking at the situation beyond simply transporting products via ocean, air, rail or truck. Some of the criteria that UPS addresses with customers includes the risk of lost sales, penalties from not meeting contractual agreements, the added cost of carrying more inventory, the cost of redirecting shipments that are already in transit, and the ability to source products from other vendors or production facilities.
Q: Are you diverting ocean shipments from the West Coast ports to other destinations including Canada, Mexico and the Eastern U.S. ports?
A: UPS is not recommending changing shipping routes through the U.S. West Coast ports for a variety of reasons. The U.S. East Coast ports are already at capacity and can cost twice as much to transport products through compared to the West Coast ports. Canada and Mexico offer some viable options but are not bolt-on solutions.