U.S. Supply Chain At Risk As Labor, Port Execs Try To Reach Deal

More congestion at West Coast ports is the last thing the US economy needs right now. Delays caused by a cargo flood last year have resulted in severe shortages of products throughout the economy, adding to inflationary pressures, Chris Isidore reported for CNN Business.

Photo Insert: A container ship at the Port of Los Angeles

A recent round of labor negotiations between management at the 29 ports along the coast and the International Longshore and Warehouse Union, whose members load and unload ships, has businesses that rely on the ports extremely concerned.

"I'm extremely nervous. I've seen this movie before," Isaac Larian, CEO of MGA Entertainment, widely known for its Bratz dolls, said. "There's no real alternative to using these ports. I'm praying twice a day, rather than once."

The contract, which covers around 16,000 International Longshore and Warehouse Union members working at the ports, is set to expire on July 1. At this moment, it is improbable that a settlement will be struck by that deadline.

Last week, management and the union published a statement attempting to reassure companies that, while the two sides do not anticipate striking a new agreement before next month, they are ready and happy to continue operating within the provisions of the current contract. "Contrary to speculation in media reports," the joint statement read,

"Neither party is preparing for a strike or a lockout,” according to the statement. However, analysts believe enterprises who rely on the ports have every cause to be concerned.

"There's definitely nervousness, and there should be," said Peter Tirschwell, vice president of S&P Global Intelligence, who follows marine and port issues. He said that during a trip to Los Angeles earlier this month, President Joe Biden met with the leaders of both the ILWU and the Pacific Maritime Association (PMA), the body that represents ship lines and port operators in the labor discussions.

"The perception of risk is so great that the president of the United States felt he needed to meet and knock heads together," Tirschwell explained. "More problems at the port is the last thing he needs."

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