The National Retail Federation’s inaugural NRF Supply Chain 360 conference kicked off with calls for action on Section 301 tariffs, West Coast labor contract negotiations and other heavyweight topics for the industry.
The conference, which wraps Tuesday, is taking place in Cleveland, Ohio in a state where retail generates nearly two million jobs across 139,000 businesses.
“Unfortunately, the challenge posed by the global pandemic and inflation will be with us for some time,” NRF vice president of supply chain and customs policy Jonathan Gold said in his opening remarks Monday. “These disruptions have made it even clearer now how critical and complex supply chain management is for retailers.”
The comments come as companies across industries rework their logistics and broader supply chains as they brace for continued challenges, amid inflation and high consumer demand.
NRF, even with the headwinds, is still forecasting retail sales this year to increase 6 percent to 8 percent.
The strong demand driving sales is part of the challenge. Even with retailers’ supply chain mitigation strategies in place, Gold pointed out, a shortage of drivers, truck equipment and inland storage space will keep the backlog of import containers high.
Added to that, Gold went on to say labor and household balance sheets “can only hold up so long in the face of persistent inflation.”
Some 58 percent of U.S. households are now tapping savings or charging to cover expenses, Gold said.
“Those in the lowest income category are hit the hardest,” he said. “The Federal Reserve can focus on long-term economic policy, while Congress and the administration need to take steps now.”
NRF is calling on Congress to repeal tariffs on the cost of goods from China that the association said have come at a price of $136.5 billion to U.S. importers since 2018.
Repealing the tariffs, Gold said, would help make everyday items more affordable.
It’s a big topic for NRF, which is spending seven figures on an ad campaign advocating for the repeal across multiple channels, including digital and broadcast.
NRF and other industry groups secured a legislative win with Congress’ passage last week of the Ocean Shipping Reform Act of 2022 (OSRA22), which is seen as another mechanism for addressing supply chain snags and inflation. It also had the support of AAFA and a number of other trade groups.
While the legislation doesn’t directly regulate the container costs charged by carriers, with the rise in pricing the past two years a point of contention for shippers, it does aim to boost the watchdog powers of the Federal Maritime Commission (FMC) over ocean freight carriers.
OSRA22 does that by placing the burden of proof on carriers for invoicing of detention and demurrage, or late fees, charged to shippers. It also requires carriers to report to the FMC how much in imports and exports they handle within the U.S. on a quarterly basis among other things.
“In addition to the existing supply chain challenges, retailers remain very concerned about the ongoing West Coast port labor negotiations, and potential additional disruptions as a result,” Gold went on to say.
The International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA), the group representing terminal operators in the labor contract negotiations, issued a joint statement last week confirming a new agreement would not likely be reached by July 1 when the current one is set to expire.
However, the two groups attempted to soothe concerns of a disruption, reiterating their “shared commitment” to reaching a new deal and confirming there are no plans for a strike or lockout.
“The parties have already signaled that they will not have a new contract in place by July 1, but the question is what happens after that?” Gold said. “The parties did say last week in the joint statement there won’t be a strike or lockout but, again, we know the history of these negotiations with disruptions that occur through slowdowns and other actions.”
In a matter separate from the current negotiations, shift changes at the ports of Tacoma, Seattle, Oakland, Los Angeles and Long Beach occurred Monday in observance of the Juneteenth holiday. The local chapters of the ILWU at those facilities moved their stop-work meeting to the day shift, with work resuming in the evening.
Stop-work meetings are held monthly to discuss union matters and are part of the collective bargaining agreement worked out between labor and the employers.