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Port Problem Solved Just in Time

10 Oct, 2002 By: Thomas K. Arnold

President Bush's ending this week of a 10-day work stoppage at West Coast ports came just in the nick of time to avert disaster, said video industry executives.

With the exception of Blockbuster Video's 3.000 life-sized Spider-Man figures stranded aboard ship off the California coast, merchandise was starting to come ashore by Thursday.

DVD, videocassette and video game inventories are expected to be sufficient for demand, although there were some tense moments prior to the Oct. 9 back-to-work order.

Wal-Mart, one of the country's top sellers of home entertainment software, was bracing itself for shortages.

“We are in stock on videocassettes, DVDs and video games, so there is no immediate issue,” said Wal-Mart spokesman Tom Williams. “But if this had continued, it certainly should have caused some difficulty.”

Williams added that Wal-Mart, like many big retailers, had already cleared most of its holiday inventory through the ports earlier this year in anticipation of a lockout of union longshoremen. “We did accelerate some product,” he said.

The same is true at Hastings Entertainment, a multimedia chain based in Amarillo, Texas.

“We bought forward, anticipating the strike,” said John Marmaduke, the chain's CEO and president. Had President Bush not intervened, however, “we would be feeling it in January on home theater products,” he added.

At Best Buy, spokeswoman Donna Beadle said in an e-mail that the consumer electronics chain had “a plan in place that required our vendors to hold additional safety stock in the United States in the event of a strike.”

Had the stoppage been any longer, she added, Best Buy would have brought in “critical product by air freight, as necessary.”

Suppliers of home video product also are breathing a sigh of relief. Most of the big studios replicate the bulk of their DVDs domestically, and companies like Warner Home Video that do farm out some replication duties overseas use air freight. The Amaray boxes that most suppliers use to package DVDs, however, are another story -- and had the stoppage gone on any longer, there could have been problems.

“We get the vast majority of our boxes from overseas, so we were concerned,” said one studio executive. But with the back-to-work order, “it seems we're going to be OK,” the studio executive said.

Shipping industry observers have said that for each day the ports are closed, it takes seven days to get the supply chain moving again as before. But in the case of the Amaray boxes, “there are so many over here already that it's probably not going to affect the fourth quarter,” the studio executive said.

The closure has already cost the economy nearly $20 billion. The work stoppage began Sept. 27 when port managers locked out an estimated 10,500 members of the International Longshore and Warehouse Union after a work slowdown. The union and the Pacific Maritime Association, the management group that represents major shipping lines and terminal operators, are at odds over an expired labor agreement.

President Bush Oct. 7 named a board of inquiry to consider the impact of the lockout on U.S. trade and the economy. A day later, he successfully sought a court order to reopen the ports and give each side an 80-day “cooling off” period.

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