West Coast port closure has little effect on IT shipments

IDG News Service - Twenty-nine ports along the West Coast of the U.S., from Seattle to San Diego, remained largely shut down yesterday as talks continued between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). As the two sides met with the director of the Federal Mediation and Conciliation Service (FMCS), some IT companies dependent on parts from Asia kept a close eye on negotiations while other companies asserted that their supply chains remained largely unaffected by the shutdown.
"We are following the negotiations very closely. We're really hopeful that the two sides will continue to talk," said Ashley Wood, a spokeswoman for Gateway Inc. in San Diego.
Gateway receives PC monitors from Asia primarily through the Port of Long Beach and has had contingency plans for an interruption in place for some time. It has been watching the situation closely since the union's three-year contract expired July 1.
"Because we are in a quiet period due to our upcoming earnings announcement, we cannot outline our contingency plans, as a lot of that has to do with issues of inventory, but the plans do include shipments by air and land, as well as sea," Wood said.
The lockout of union dockworkers by the PMA at the West Coast ports began over the weekend and has the potential to cost the U.S. economy $1 billion per day, according to David Hummels, an associate professor of economics at Purdue University's Krannert School of Management in West Lafayette, Ind.
The West Coast ports handle about half the nation's imports and exports, worth about $300 billion in cargo per year. Though the IT sector in the U.S. is largely dependent on parts sourced from Asia, it's still in better shape than other industries, Hummels said.
"When it comes to electronic components, the IT industry is one of the industries that can most easily shift from ocean to air sourcing, in part because of the small size and weight of some components, like chips," Hummels said.
Chips makers Intel Corp. and Santa Clara, Calif.-based Transmeta Corp. and server maker Sun Microsystems Inc. all asserted that they are, and would continue to be, wholly unaffected by the lockout.
"For the most part, Intel ships nearly all of its products from factories or from customers by air; the throughput time that technology requires is very small and water shipping is too slow," said Intel spokesman Chuck Mulloy.
Because the parts are small, it's cost-effective for Intel to ship its components by air, especially when time is