Here’s what you need to know about the West Coast port labor talks and how they may impact supply chains, logistics and transportation operations.
In May, contract negotiations got underway for about 15,600 dockworkers at the Port of Los Angeles and the Port of Long Beach. The Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) are negotiating a contract, with PMA representing port employers and the ILWU representing the dockworkers. The current contract expires on July 1, 2022.
The New York Times says the ILWU represents nearly three-fourths of the union members who work at the ports of Long Beach and Los Angeles, the primary gateways for shipments coming to the US from Asia. If the talks don’t go well or if they extend too far past the June 30 deadline, it could affect supply chains that have already been weakened by the ongoing impacts of the global pandemic.
“A labor impasse could worsen the floating traffic jams that have kept dozens of ships waiting in the Pacific before they can pull up to the docks,” the New York Times states. “That could aggravate shortages and send already high prices for consumer goods soaring.”
Already dealing with current supply chain disruptions, transportation delays and other logistics issues, companies are paying attention to what goes on at the bargaining table. “Even in quieter times, the prospect of union negotiations at some of the world’s busiest ports presents the legitimate possibility of a significant impediment to world trade,” the New York Times adds. “These are not quiet times.”
What’s at Stake?
ILWU workers and the port terminals renew labor contracts every few years. Currently, the US Chamber of Commerce says both parties share a goal of agreeing on a new contract by July 1, but because this contract will set pay, benefits, work hours, and other issues for several years, much is at stake.
“This year, the stakes are especially high. U.S. businesses are still recovering from the supply chain challenges of last year, which saw record traffic flows snarling West Coast ports,” the Chamber reports. “These contributed to historic delays in delivering goods and products to businesses and consumers.”
According to Supply Chain Dive, the message of “mutual cooperation” is one that both the PMA and IWLU have consistently emphasized as they set the stage for contract negotiations. It says officials from both the ILWU and PMA emphasized their optimism in the negotiations, noting the trials of the Covid-19 pandemic had helped cement a cooperative relationship. “And while each side expressed confidence in reaching a deal,” the publication states, “they also came short of guaranteeing that the talks would conclude before the current contract expires.
“I expect the contract negotiation to go past July 1, they always do,” PMA CEO Jim McKenna said. The ILWU confirmed similar expectations in an email. He added that the duration of the talks is not the core issue. “It’s just, we need to stay at the table and get an agreement without causing any further disruptions,” McKenna said, as reported by Supply Chain Dive.
It’s Not Always Easy
The time and disruptions involved in previous contract negotiations have widely varied, according to the publication, which says that:
- In 2002, talks were extended for almost three months past the July 1 contract expiration date and an impasse led ports to shut down before a deal was reached.
- The 2008 talks, meanwhile, caused little to no disruption and lasted for three weeks past the expiration date.
- During the most recent round of bargaining in 2014, negotiations prolonged for eight months beyond expiry and featured work slowdowns.
The Los Angeles Business Journal says the current negotiations appear to be off to a better start. “From a general perspective, I think the relationship between the two sides is very healthy,” McKenna said. “The pandemic and coming together and really working towards overcoming the obstacles have solidified our ability to work together.”
And while there will be difficult issues to discuss—hours, wages, working conditions, and other topics—McKenna said everyone involved is focused on this contract. “And like all the other contracts, it will have a start, it will have a finish,” he concluded, the LA Business Journal reports, “and whatever happens in the middle will be between the two sides.”