Marketers Ready if Port Shutdown Is Brief

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The Sharper Image knew it needed to plan for the possibility of a West Coast port shutdown.


"We will be minimally impacted relative to other retailers," said spokeswoman Molly Madrigal, who estimated that 90 percent or more of the company's merchandise comes from Asia. "We have had contingency plans in place for six months. We have continuously increased our merchandise starting with the time period prior to Father's Day -- in April and May -- in preparation for any issues that would have come up with the longshoremen since they've been working without a contract for several months. We are in a position to get through it.


"If this goes on for months, we would be impacted because we would have to air some of our merchandise. I can't give you a timeline regarding how long inventory will last."


A months-long shutdown appears unlikely given the effect on the economy and the Direct Marketing Association's update on the situation yesterday stated that port operators "seem sure" that President Bush will implement a Taft-Hartley injunction -- an 80-day cooling-off period -- "within the next week."


The update also said that "union authorities also seem sure that the president will use this tactic, but are less sanguine about timing -- although they believe it would happen earlier rather than later.


"Even with this type of presidential intervention ... any return to 'normal' would still take about one month due to the huge backlog of ships at West Coast ports. Also, the International Longshore and Warehouse Union may impede any return to normal by staging labor slowdowns."


The DMA also said that big retailers took some precautions and filled warehouses before the stoppage.


Most of the ships just off the West Coast are in limbo as they cannot use the Panama Canal nor can they use limited facilities in Mexico or Canadian ports where union sympathies can be found, the statement said.


David Hochberg, vice president of public affairs at Lillian Vernon Corp., Rye, NY, described the effect on his company as negligible.


"We import 1,200 containers per year from overseas, of which four are being impacted," he said. "We sell 6,000 SKUs. There are 10 SKUs in those four containers. Shipments leave ports in Asia, they go through the Panama Canal and they go to Norfolk, VA, which is the major port next to Virginia Beach where our distribution center is located. Those four containers that are impacted are not due into the ports of the West Coast until next week.


"But if the strike would stretch on for [the] long term, it would have a big impact on us. What would happen is all these shipping companies that traditionally rely on the West Coast could potentially, if [it] drags on, start rerouting their shipments to the East Coast, in which case the East Coast ports like Norfolk would be overwhelmed and then there would be delays."


Debbie Koopman, The Spiegel Group's vice president of corporate communications, said, "We're not feeling any immediate impact, but we do have some product that comes through those ports."


Lands' End, in a statement, said, "We ... historically hav[e] inventory in stock at least four weeks ahead of the corresponding catalog drop. We have contingency plans in place to help ensure merchandise availability and delivery should the U.S. shippers and longshoremen remain deadlocked on an agreement."


A Salomon Smith Barney analyst said yesterday that the shutdown could hurt sales and earnings for Amazon.com Inc. in the final three months of the year if the closure is prolonged, Reuters reported. Lanny Baker said a drop in inventory for the electronics, tools and kitchen goods sold on Amazon's Web site could reduce the online retailer's revenue by as much as $118 million in the fourth quarter. Fourth-quarter revenue would be $1.149 billion instead of an estimated $1.267 billion, and net income would be $20 million below forecast, he said.


The Los Angeles Times reported yesterday that the dockworkers union agreed Oct. 2 to let federal mediators help solve a contract dispute regarding the use of labor-saving technology at cargo terminals. The Pacific Maritime Association said it was not ready to end the lockout it imposed Sept. 29 unless the union guaranteed it would not conduct work slowdowns.


"We have some catalog delivery issues on the West Coast," said Naomi Langbecker, vice president of marketing at TravelSmith Outfitters, Novato, CA. "We have some catalogs in railcars that can't move because of other cars that can't move since they can't be unloaded at the docks. It's our holiday book, but it's a small percent because it's a localized problem here in the [San Francisco] Bay Area. It's probably in the single digits in terms of the percentage of the overall drop. They were scheduled to be in homes next week, but they won't make it on time."


Jim Klaus, president of Children's Wear Digest Inc., Richmond, VA, said 3 percent of his company's holiday catalog drop, the part going to the Bay Area, is stuck on a train that has been stopped due to the port shutdown. Overall circulation for the holiday book is 600,000, which had drop dates of Sept. 30 and Oct. 1. The catalogs were being shipped from Quebecor World's plant in Olive Branch, MS.


"If 3 percent of your catalogs aren't getting there, 3 percent of your sales are being delayed," he said.


David Mazzotta, director of marketing at Sundance Catalog, Salt Lake City, said, "We're going to see some delayed shipments in apparel, jewelry and home decor from the docks to our warehouse. The holiday mailings will be impacted since they will go out from mid-October through November. Perhaps there will be some fulfillment issues in those categories for the holiday season. It's a good incentive for our customers to order early."


Mitch Siegler, president/CEO of Fulcrum Investments, San Diego, which publishes the Treasures from a Bygone Era and Sovietski Collection catalogs, said, "We were fortunate to have brought in much of our merchandise earlier in the year. We received six containers through the Port of Long Beach over the past four weeks, but all before the lockout, so we were not impacted. But we do have one container on the water that is three weeks away, and unless this is resolved soon, that could be delayed. Obviously there will be a bubble as the people already in the queue need to be unloaded and processed first."


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