Port dispute ‘devastating’ to Seattle economy

Seattle businesses are facing tough decisions as work at local ports remain bogged down.

Businesses are losing customers and laying off workers. Some are talking about closing, said Eric Schinfeld, who runs the International Trade Program for the Seattle Metropolitan Chamber of Commerce.

“The word I would use is devastating,” he said.

Along with the affect on businesses, about 40 percent of jobs are tied to trade, said Schinfeld.

Related: 2 sides in West Coast seaport dispute race against deadline

The average consumer is already seeing the affects of the port disruptions. Prices are increasing and some goods may not be readily available.

“I’ve heard stories of people who have gone to the store and not been able to get a product because it’s stuck on a ship in the Puget Sound,” said Schinfeld.

There are even some Washington business owners wary of using the port in the future.

The Tillman’s Christmas tree farm, which shipped more than 2,000 trees to Hong Kong in November, saw the impacts of the port dispute early on. The trees were supposed to arrive the day before Thanksgiving, instead, they arrived Dec. 8.

“[The trees] were over two weeks late,” said John Tillman.

Tillman said his wife no longer wants to ship during port contract years. He said that might be a stretch, but they might ship trees a few weeks early from now on.

The good news for the Tillmans and their customer in Hong Kong: Only 60-70 of the trees shipped were dead by the time they arrived.

“I’m sure there will be other people that won’t survive this,” said Tillman.

It’s not just Seattle-area businesses. The United States economy could be taking a huge hit because of the West Coast port disputes.

A five-day shutdown could cost the economy about $2 billion a day, according to a study done by the National Retail Federation. That number would increase to about $2.5 billion a day.

“That’s why we need the parties [involved] to get a conclusion today, because of the ripple effect it has on the economy,” said Jonathan Gold, the federation’s senior director of media relations.

An ongoing contract dispute between port operators and union workers led to a months-long work slowdown that’s left a growing number of vessels anchored in waterways across the West Coast. The International Longshore and Warehouse Union has blamed employers, saying they failed to manage the supply chain efficiently. The Pacific Maritime Association, which represents shipping companies as well as port terminal operators, has said for months that workers have slowed their work by about 50 percent to gain bargaining leverage.

There are retailers already reporting negative impacts from the port shutdowns. Perry Ellis, a men’s clothing company, reported a $23 million hit to revenue recently, said Gold.

Citing CNBC, Kurt Salmon, a retail consulting firm, reported the port disruptions will cost the industry $7 billion this year.

While retailers began preparing for negotiations at the ports in 2014, the ports have slowed down for longer than expected.

“The problem is, nobody planned for a long-term disruption,” said Gold. “It’s cost a lot of people money.”

Retailers have another option to ocean shipping, albeit more costly. Air freight, while useful, is eight to 10 times more expensive. Other retailers shifted their cargo to other coasts and Canada or Mexico; or they brought product in earlier than normal.

Retailers don’t want consumers to notice a problem.

“The hope for most retailers is the consumer won’t see an issue and won’t see an empty shelf,” said Gold. “There are no guarantees at this point in time, especially with the longer this situation goes.”

The issue hits more than retailers. Farmers, manufacturers, truckers – anyone who relies on the ports – are feeling the effects.

“This is going to have an impact far and wide,” said Gold.

There are no temporary solutions at this point.

“Folks are kind of stuck,” he said.

At Four Seasons, a transportation company serving the ports of Seattle and Tacoma, the port shutdown has significantly impacted business.

“It’s affected us greatly,” said co-owner Samson Yohannes.

There are three partners in business, none of which have been paid in about three months to allow Four Seasons to pay its drivers.

There has been a reduction in drivers, too. The company employed 13 drivers – previously about 20 – and is now down to about six. Drivers are opting to go work where ports aren’t involved because they don’t get paid unless they are making deliveries, explained Yohannes.

Business hasn’t always been perfect in the past, but now the company is barely seeing any work.

“Our phones are usually ringing off the hook,” said Yohannes. “Emails left and right.”

He said they had a day this week where there were no emails to respond to.

Though he said there are good people who work for the port, drivers are getting “the run-around” and there are no clear answers.

Even if a settlement is reached at the ports, it’s going to take 45-60 days to clear the backup caused by the labor disputes, according to Gold.

“Without the union being taken out, there’s not going to be any changes,” said Yohannes. “It will happen again in a year or two.”