LOS ANGELES—The West Coast ports could be approaching a labor strike. After nine months of labor negotiations, the Pacific Maritime Association and the International Longshore and Warehouse Union have been unable to reach an agreement, and it could mean the complete shutdown of the West Coast Ports, according to Kurt Strasmann, senior managing director of the port logistics group at CBRE.

“They are very close to the tipping point, and I think most people would agree that we are at the very end of the rope,” Strasmann tells GlobeSt.com. “Some people have come in to help mediate, but they could shut it down any day. This is a very important time right now.” A strike would mean the complete shutdown of the five West Coast ports: Los Angeles, Long Beach, Oakland, Seattle and Tacoma. The result would cost the national economy $2 billion per day, and have a significant impact on the Southern California economy—where the combination of the Los Angeles and Long Beach ports account for 35-40% of all goods coming in to the country. The West coast ports together account for 44% of the total goods coming into the country, which equates to 12.5% of US GDP.

“There is going to be tremendous pressure on both groups because the port drives so much business, and it is so important, not just to the West Coast , but to the national economy,” adds Strasmann. “Long Beach and Los Angeles alone account for 40% of all goods coming in, and that directly affects a lot of different types of companies.”

The dispute is over compensation, pension packages and benefits packages. The last dispute was in 2002, the last time the contracts were up for negotiation. That dispute resulted in a 10-day shutdown of the ports, and cost the economy $1 billion per day. Companies are either forced to reroute to Vancouver or through the Panama Canal to the gulf ports and the Southeast ports, or wait it out and hope that the dispute ends soon. However, everyday that a ship stays out in the port and is not able to unload, it costs upwards of $50,000 per day, according to Strasmann.

In addition to the affect a shutdown would have on the economy, it will also have an affect on the industrial market. In the short term, companies may rent temporary industrial warehouse space near other ports. “I think in the short term those places near large ports, like Houston, will benefit; however, not all ports are capable of handling ships of this size,” says Strasmann, who reassures that any affect on the industrial market will be temporary. “In the long term, I don't think it will affect our real estate much, because it is all about speed to market. It is still the most efficient, fastest and low cost for Asia to ship to the west coast and the truck across the country.”