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TROUBLE ON THE WATERFRONT

Woes Spreading Beyond Ports

Commerce: Retailers and manufacturers face a dilemma: wait for the ports to open or pay a premium to ship by air.

October 02, 2002|LESLIE EARNEST | TIMES STAFF WRITER

Mark Steele stared Tuesday morning at the fine print on his shipment status report, trying to figure out which of his company's shorts and sweatshirts were stranded at sea by the West Coast ports closure.

"Rough day today," said Steele, a freight traffic manager for Irvine-based O'Neill Clothing, which sells surf wear and other casual clothes.

With about half of its apparel for the holiday shopping season missing in action, the Irvine sportswear firm is among thousands of manufacturers and retailers across the country concerned about how the trouble at the ports will affect their businesses.

Officials at shoemaker Sole Technology Inc., for example, wonder whether the Lake Forest company will be able to deliver some of its latest skate shoes to retailers in time for the Christmas season, spokesman Timothy Nickloff said.

"It's a very, very difficult time," Nickloff said. "All three of our brands are basically out there."

Typically, a shipment from China takes two weeks to arrive in Los Angeles.

Thus, many apparel importers are facing a decision--whether to hope the lockout ends in time to get their shipments, or to bite the bullet and pay the premium for air freight.

Importing apparel by air would cut into margins, "but better to cut in on their margins and deliver products than not deliver at all," said Dan McInerny, a Surf Industry Manufacturing Assn. board member who owns Hub 360, an industry Web site.

"This could go on for a day, a week, a month. Who knows? So it's a real crapshoot for some of these companies."

Jeff Klinefelter, a retail analyst at brokerage firm U.S. Bancorp Piper Jaffray in Minneapolis, said some apparel retailers, such as Limited Brands Inc. and Abercrombie & Fitch Co., anticipated the ports' problem and put some key holiday items on air-cargo flights instead of ships.

But "the majority of specialty apparel retailers we talked with on Monday are waiting until Friday before they pull the trigger on choosing to switch to air shipping versus ocean shipping for future key receipts," he said in a note to clients Tuesday.

Klinefelter also said retail giant Wal-Mart Stores Inc. reported that "the majority of [its] Christmas merchandise has been received," so the goods currently blocked at the ports are mainly for restocking store shelves after the holiday.

O'Neill Clothing, which gets 80% of its products through the ports of Los Angeles and Long Beach, decided Monday to make the switch from sea to air, said Toby Bost, executive vice president of operations.

The move could double the company's shipping costs and won't help it get the goods that are en route or stuck at the ports, he said.

"We're all on the edge of our seats," Bost said. "It's not a very good outlook for anybody in the clothing industry, given the time of year especially."

Most in the industry seem to expect that the problems at the ports will be resolved fairly quickly. Meanwhile, the owner of the Hermosa Beach-based Becker Surf & Sport chain figures he can juggle products for a while.

"I can substitute one guy's sweatshirt for another guy's sweatshirt, or one pant for another pant," said Dave Hollander, who operates five stores in Southern California. "There's plenty of T-shirts to go around."

Sole Technology also says it has enough products stocked in its warehouses to pacify retailers for now, and O'Neill Clothing expects air shipments to begin arriving quickly.

But having endured the effect that last year's terrorist attacks and a wobbly economy have had on their businesses, local apparel manufacturers and retailers clearly are frustrated by this latest setback.

O'Neill Clothing, which is the apparel licensee for Santa Cruz-based wetsuit maker O'Neill Inc., expected record sales this year, Bost said.

As of last week, revenue was up 30% compared with 2001, boosted by strong products and more money spent on advertising and marketing.

"This definitely has the potential to take some of the momentum out of a banner year," he said. "How many more [bad] cards can be dealt to an already poor economy?"

Times staff writer James F. Peltz contributed to this report.

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