Pacific Play Tents and Stansport Inc., both based in Los Angeles, are facing a tough spring ahead if the slowdown at the ports of Los Angeles and Long Beach continues.
The two camping equipment companies have more than $2 million tied up in tents and other gear stacked inside 38 containers on the water near the L.A. and Long Beach ports, said Brian Jablon, executive vice president of the two businesses.
That investment is impossible to recoup until the goods are off the ships and on the way to customers, which can't happen until dockworkers and employers reach agreement on a new labor contract. A long line of ships sits offshore, unable to dock and unload, which is putting a squeeze on many companies.
"You basically are held hostage until you get your containers," Jablon said. Shipping companies are already charging an extra $1,000 per container to cover extra expenses on ships idling in the water and unable to unload.
Redirecting ship to the ports of Oakland, Portland or Seattle is not an option because those are backed up as well, Jablon said. And forget shipping by air -- that could be 10 times as expensive as by sea, he added.
The only feasible plan may be ships that travel via the Panama Canal and dock in Houston or elsewhere along the Gulf of Mexico, he said. That option costs an additional $2,000 per container for extra freight and trucking costs.
Uncertainty is the worst part, Jablon said. Without an inkling of when a new labor contract will be signed, there is no way to make definitive plans.
"It's like trying to drive a car with a blindfold," he said. "When my retailers say 'When are you going to deliver?' My response is 'I don't have any more crystals in my crystal ball.'"
Stansport and Pacific Play Tents are considering tapping into a line of credit at their bank, the first time in their history, Jablon said. Other options include voluntary unpaid days off for the 46 or so workers, or employee contributions to health insurance, which are 100% employer funded right now. The goal is to avoid layoffs, Jablon said.
"I have 38 families here and 15 in Indiana, not to mention all my salesmen," he said. "I have people in the warehouse who have worked for us for 30 years. This impacts us tremendously financially."
Jablon said the only silver lining that may come out of this ordeal is if companies are encouraged to move manufacturing back to the U.S. But he said labor costs in America still tend to make the process too costly.
"If I could be price competitive, I would move all manufacturing back to the U.S.," he said. "I'd rather make it in the U.S."