Despite federal mediation, PMA and ILWU labor negotiations remain far from a done deal

Even with the Pacific Maritime Association and International Longshore & Warehouse Union meeting with the U.S. Federal Mediation and Conciliation Service in hopes of helping the sides find a way to come to an agreement over stalled labor negotiations, the relationship between the parties, whom have been at odds for eight months, remains contentious.

As previously reported, an unwelcome combination of a lack of meaningful progress and intensified conflict have resulted in ongoing and extended negotiations over a new labor contract between the Pacific Maritime Association and the International Longshore Warehouse Union (ILWU) going back to May 12, with their contract having expired on July 1. The ILWU represents nearly 14,000 port workers in California, Oregon, and Washington, with more than 40 percent of U.S. incoming container traffic moving through West Coast ports at the Ports of Los Angeles and Long Beach, according to industry estimates. The PMA represents shipping lines and terminal operators at 29 West Coast ports.

The ongoing tension between the parties has resulted in hindered productivity and also been a contributing factor in port congestion on the West Coast, especially as it led up to the holiday season.

The PMA said yesterday that the current state of terminal productivity at the five largest West Coast ports is approaching gridlock, due in large part to what it labeled ILWU-staged shutdowns.

“Since late October 2014, the ILWU has crippled what were fully productive terminals in the Pacific Northwest and Oakland, and exacerbated a difficult congestion issue at the ports of Los Angeles and Long Beach by intentionally withholding dozens of essential skilled workers each shift for the past 10 weeks,” PMA officials said.

They added that what the ILWU is doing counters 15 years of precedent while targeting the skilled workers most essential to clearing congested terminals. What’s more, PMA said that by withholding an average of 75 yard crane drivers each day, the ILWU has stalled the movement of tens of thousands of containers, and has also reduced Southern California yard-based positions by 67 percent.

While the ILWU and PMA are in federal mediation talks, FMCS will not release information regarding future meeting dates and locations and will not comment regarding the status or substance of the negotiations. But even with no public updates of the talks, PMA said that the ongoing work slowdowns are leaving terminals “in peril of complete gridlock.

In an interview with TranzAct Technologies Chief Relationship Officer Mike Regan as part of TranzAct’s On the Record interview series, Port of Long Beach Chief Executive Jon Slangerup said the issues between the PMA and ILWU have been a major faction for West Coast port congestion over the last month specifically, explaining that both parties have engaged in actions that have further inhibited the ability of ports to dig out of its backlog.

“We are at more than 90 percent of our capacity in terms of areas to put containers [at POLB] and are digging out of what was a historically high Peak Season, with laborers showing up to work every day in spite of not having a contract over the last 7-8 months or so, yet we are short-handed, and because of just sheer congestion and volume of containers we have on the port’s properties, we are really struggling to dig out of this thing,” he explained. “We currently have eight ships out at anchor and usually at this time of year we have zero to one or two maximum. It is a problem but not insurmountable and not a typical thing that has been brought on by an unusual set of events.”

These events include the emergence of mega vessels mainly introduced in 2014 that Slangerup called “game changers” for the amount of volume the port needs to handle in a given amount of time, which has led to capacity expansion and increasing the size of cranes, as well as strong import and export levels buoyed by an improving economy that caught many industry stakeholders by surprise.

This combination, coupled with limited labor resources due to the PMA-ILWU squabble has created a difficult operating environment at the port in recent months.

Due to the labor issues and related congestion problems, Slangerup said that it has been three-to-four times longer to get a container moving through the system than normal, adding weeks to what us typically a three-to-five day process, with some containers held up for up to four weeks. 

“We are hopeful that some of the actions taken by each side will be relaxed during mediation, buy we cannot count on that,” he said. “If an agreement was reached today, it would take at least a month before union membership would ratify that. We are at least six weeks out in my best estimate from having any contractual relief on the labor side. We are hoping cooperation improves sooner than that, but if we have full…labor available we could dig out in a month to six weeks after that and be completely back to normal. Those are hopeful numbers, because it if takes weeks to agree, it adds weeks to that estimate.”

While negotiations have largely been at a standstill going back to the middle of 2014, shippers have implemented contingency plans to ensure their cargo is getting to its final destinations. These plans have been comprised of various actions, including:
-leveraging East and Gulf Coast ports via all-water routes from Asia diverted from U.S. West Coast services to either Panama Canal or Suez Canal;
-changing points of entry as disruptions have occurred in the form of things like weather, labor, and space availability; and
- managing its carrier base between the steamship lines, draymen, and operations

With the PMA and ILWU now agreeing to mediation, it at the very least raises the level of optimism of a deal coming to fruition.

“Without the use of the mediators, there seemed no clear path to a resolution of the drawn out negotiations,” said Paul Bingham, economics practice leader at CDM Smith.  “The failure of negotiations to conclude has already affected some shipper plans for 2015.  Further significant erosion in West Coast port market shares is likely if negotiations aren’t concluded within the next few months. The involvement of the mediators should help reach resolution now.”