West Coast Ports Contract Dispute Means Automakers Must Ship Parts By Plane

Image courtesy of Corey Templeton

The ongoing labor dispute between dockworkers and shipping companies at ports on the West Coast of the United States is affecting more than just the availability of French fries in Japan and Venezuela. McDonald’s has resorted to shipping fries by air, and some auto manufacturers are going to start sending those cargo planes back from Japan filled with car parts.

It’s more economical to assemble vehicles for the American market on the continent where they’ll be sold instead of assembling them in Asia and shipping whole cars across the Pacific. That’s why carmakers based in Japan, South Korea, and China ship parts to assembly points in North America and build the actual cars here, except for a few models with very limited production runs. They use boats, which are slower than air freight but cheaper.

Parts for those cars arrive at the West Coast ports that are currently close to completely shutting down over a contract dispute, though. Due to the labor dispute, automakers have to use air cargo to get parts to their assembly plants in the United States. A representative of Subaru told Reuters that keeping its plants supplied by air cargo costs the company an additional $60 million per month, and without doing so, their plants would have shut down. The company is chartering cargo planes: again, we think they should chat with McDonald’s Japan and arrange to send those planes back full of potatoes.

Honda told Reuters that it is also using air freight to keep American factories going. Toyota commented that it is no longer offering overtime hours to employees, but wouldn’t comment on whether they are keeping factories supplied by air. A representative for Hyundai said that the company mostly sends parts to Eastern ports, since it assembles cars in Alabama.

Japan automakers hit production snags as U.S. port dispute drags on [Reuters]