Industry stakeholders renew call for PMA and ILWU to reach a deal

While the Pacific Maritime Association and International Longshore & Warehouse Union (ILWU) are meeting with the U.S. Federal Mediation and Conciliation Service, with the goal of coming to an agreement over stalled labor negotiations, the heat being placed on the parties to accelerate progress was turned up this week.

A letter sent to PMA Chairman and CEO James McKenna and ILWU President Robert McEllrath by a group comprised of 174 organizations representing manufacturers, farmers and agribusinesses, wholesalers, retailers, importers, exporters, distributors, and transportation and logistics service providers called for the parties to come to a “resolution of the issues that is satisfactory for all concerned.”

The letter expressed disappointment in regards to the lack of progress between the parties since their contract expired on July 1, 2014.

As previously reported, the ILWU said it has bargained in good faith despite “pressure tactics” imposed by the PMA over the since the contract expired last summer. These tactics include the shifting of ocean container chassis away from union crews, and refusing to bargain a training program for longshore workers as terminals become more mechanized.

And the PMA countered, saying that the ILWU has targeted the ports of Los Angeles and Long Beach by unilaterally refusing to dispatch hundreds of qualified, skilled workers for critically important positions transporting containers in terminal yards at the nation’s largest port complex.

PMA officials said that terminal congestion has been increasing at Southern California port terminals for various reasons, including increased cargo volume, a shortage of chassis and rail cars, and a lack of available truck drivers, among others. And with the ILWU’s actions, the PMA said these job actions, which “have already crippled operations at the ports of Seattle and Tacoma, now threaten to do the same in Los Angeles and Long Beach.” Those four ports cumulatively handle more than 80 percent of containerized cargo at West Coast ports.

Along with the aforementioned labor issues, West Coast ports are also being impacted by high demand, lack of available chassis, and the ongoing driver shortage, among other factors.

This situation has become exacerbated in recent months, with the Cass Freight Index Report released this week noting that the situation at West Coast ports has significantly deteriorated, with myriad issues slowing port throughput and resulting in delays and off-loading of cargo to East and Gulf Coast ports, delayed deliveries of three weeks or longer out of West Coast ports, labor issues, chassis shortages and inefficient chassis distribution, larger TEU ships, and rail capacity issues, among other challenges.

The letter to PMA and ILWU leadership stressed that the consequences of not reaching a deal quickly are too large to be ignored, given the negative impact it has had on port operations, hinting it could lead to a permanent shift in volume leaving West Coast ports.

“Over the summer months, both sides verbally agreed to work during the negotiations without interruptions,” the letter stated. “That promise was broken and the consequences have been to the detriment of our collective industries, the economy and our global competitiveness. The stakes are extremely high and the uncertainty at the West Coast ports is causing great reputational and economic harm to our nation. Policymakers in Washington, DC cannot solve the myriad of issues surrounding these talks, but the competitive marketplace will respond if you continue on this current path.”

Other issues stemming from the stalled negotiations cited in the letter include:
-sales of American exports remaining clouded in uncertainty across Asia, with global competitors highlighting the West Coast port issues as a reason not to purchase American made or grown products;
-Midwest manufacturers having to slow and also stop production lines due to delays in receiving containers from the West Coast;
-retailers seeing delays of early spring merchandise, including products for Valentine’s Day and Easter; and
-the cumulative impact of supply chains in all sectors adversely impacted due to the lack of progress, with the stakeholders writing in the letter that it is “black eye for the broader economy and some jobs have and will continue to be lost as a result of continued delays at the ports.”

Ben Hackett, founder of maritime consultancy Hackett Associates, told LM that this current situation has led to some increased activity at East Coast ports and via the Suez Canal, with those ports getting increased cargo share albeit not a dramatic gain.

“Hopefully, the labor resolution gets resolved and any delays or congestion issues are now purely due to labor and are not operational issues anymore,” he said.

When asked if shippers have lost faith in West Coast ports, due to the ongoing squabble between the PMA and ILWU, Hackett said that some shippers are likely to continue using West Coast ports, with some leveraging East Coast all-water routes, and importers, he said, are likely to play things safe by using both East and West coast ports.