Port of LA Executive Director: ‘We simply can’t leave the worker behind’

Port of LA Executive Director Gene Seroka joins Yahoo Finance Live to discuss the current state of supply chains, negotiations with dock workers, and the outlook for idling vessels.

Video Transcript

- The global pandemic weighing on the shipping industry, but here in the States, there's the added complication of a wide ranging labor dispute that could further disrupt the ports. For an update from the docks, let's bring in Port of Los Angeles executive director Gene Seroka, who manages the busiest container port in North America. Gene, great to have you on the program. Again, again those labor talks still happening, the White House keeping a very close eye on the progression of those negotiations. Give us an update from where you stand in terms of whether or not we are closer to a deal between the longshoremen and the Port.

GENE SEROKA: Yeah, good morning, Brian. The discussions and the talks at the table between the Employers Association, the PMA, and the International Longshore and Warehouse Union continue unabated. Both sides recently announced that they reached a tentative agreement on the health and welfare aspects of this collective bargaining agreement ahead of pace compared to what some had thought. So those talks continue, and yes, US Labor Secretary Marty Walsh, the White House, and the President himself continue to watch and stay available for support as needed.

- So Gene, you've made some-- there's been some movement on the health and wellness part. What about automation? I mean, that was a big sticking point, concerns from the worker side about increased automation leading to job cuts. How much ground has been made on that part in terms of negotiations?

You're right, Akiko, and while the two sides continue to talk, they're not sharing information outside of that table. So, fair to say automation will be a big topic of discussion. But we'll see where they land. From our perspective here in the city and port of Los Angeles, we know that technology is moving forward at a faster pace than ever. We simply can't leave the worker behind.

- So then, Gene, let's move on to the overall picture here of where global supply chains stand. We know that there are a lot of snags throughout this post-pandemic period. What does it look like in the summer of 2022? Have you seen pressures alleviate?

GENE SEROKA: Yes, absolutely, Brian. We've taken the number of ships waiting outside the ports to do their work from 109 in January down to 10 vessels waiting as of last night. And all this has been done while moving box for box with our record-setting 2021 at the mid-year point. And the month of July looks superb. So we continue to move record amounts of cargo while working down that backlog faster than anyone would have predicted.

- And Gene, you're now entering what is one of your busier seasons. You've got the big back to school shipments coming in. You've got to look ahead to the holiday season. We've heard so many retailers come out and talk about the excess inventory that they're trying to unload going into the holiday season. I mean, this is where it all comes through the ports. What are you seeing?

GENE SEROKA: Well, the cargo that's going to be arriving in the weeks and months ahead, Akiko, looks different than what's on the ground right now. As you rightly say, we began seeing our seasonal products like back to school landing here in Los Angeles toward the end of June, and many savvy retailers began to pull their inventory forward. So we'll have a longer, strong season for retail on both the seasonal products and the year end holidays.

And we continue to look that way into the months of August and September. So folks are trying to avoid disruptions in the supply chain, longer transit times than would have been predicted some time ago by advancing those inventories, and while some retailers have stated that they're high on merchandise in the US, they may begin discounting to make room in the warehouses and across the supply chain to bring in the cargo for this second half of the year. Some of the areas may taper just a little bit. Think of the purchases that folks made while working from home that don't happen every year-- large appliances, fixtures for bathrooms and kitchens that were remodeled. Sporting goods and some furniture purchases may start to see a little bit of a downturn simply because those inventory levels begin to fill up, and they're on to buying more repetitive goods.

- So broadly speaking, it sounds like things look like they're normalizing, but a big part of the puzzle here is also just the rail system as well, right? It doesn't matter if you're actually seeing things greased up on the docks themselves if you can't get it onto the rails to ship out to the rest of the country. Any alleviation on that point? They're also dealing with labor negotiations as well.

GENE SEROKA: Right, both Western railroads are working around the clock with us and the federal government and so many of these discussions that we have on a daily and weekly basis. Bottom line, Brian, is the inland rail terminals look like the ports did last year. They're clogged up. The importers must pick up the cargo quicker so we can load and move out the next trains from here in Los Angeles. If we can get that going, everything is moving really well from our perspective.

- Appreciate the update as always. Port of LA Executive Director Gene Seroka, good to talk to you today.