Could the possibility of a West Coast port labor deal between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) be finally inching to reality? A recent report in the Wall Street Journal (WSJ) published yesterday indicated that could be the case.
The ILWU represents port workers in California, Oregon, and Washington, with more than 30% 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. And the contract, which expired on July 1, 2022, represents more than 22,000 dockworkers at all 30 U.S. West Coast ports.
The WSJ report stated that contract talks between the parties “appear to be headed into their final stretch following agreements on several major issues, potentially clearing the uncertainty that has been hanging over U.S. importers heading into the crucial fall selling season.”
The report cited officials “familiar with the matter” noting there are hopes that a tentative agreement may be done by next month, which would be welcome news for West Coast ports that have seen cargo exit to East and Gulf coast ports over the last several months, with volumes down, as shippers looked to have their bases covered, in the event that labor talks were to completely break down.
This follows a positive development from last month, when on April 20 the ILWU said that it had reached a tentative agreement with the PMA “on certain key issues,” adding that talks are continuing on an ongoing basis until an agreement is reached.
“The union and the employer previously announced on July 26, 2022 that they had reached a tentative agreement on terms for maintenance of health benefits,” said ILWU in a statement. “The parties also issued a joint press release on February 23, 2023 announcing that they continue to negotiate and remain hopeful of reaching a deal soon. The parties have agreed not to discuss the terms of the tentative agreements as negotiations continue.”
According to the WSJ report, the April agreement was focused on terms for the use of automation on port docks, with the report adding that the largest remaining issues are for wages and pensions, stating that “shipping officials familiar with the talks saying that the ILWU is likely to expect a pay increase in the first year of the new contract to at least match a deal recently reached with an ILWU local chapter in Hawaii of 10%.” Terms of a new contract also are a factor, with the report saying that the PMA wanted a six-year contract and the ILWU wanted a two-year contract, with either deal being retroactive to the expiration of the previous contract in July 2022.
As previously reported by LM in March, a group of national industry associations, largely representing shippers and freight transportation and logistics services providers, called on President Biden, in a letter, to take action, regarding the still-unresolved West Coast port labor negotiations between the PMA and ILWU.
“The labor contract has now been expired for over eight months,” the letter stated. “Negotiations have been ongoing for over ten months, with little to no progress towards a new long-term agreement. It is imperative that the administration work with the parties to quickly reach a new agreement and ensure there is no disruption to port operations and cargo fluidity.”
The letter’s authors added that it is encouraging the White House to offer mediation services to the parties in their negotiations in order to alleviate the current situation, explaining that the lack of labor certainty has led to significant cargo flows shifting away from the West Coast. And they observed that while there are other issues impacting West Coast ports, supply chain stakeholders, or “cargo interests,” have indicated they have shifted cargo, due to the stalled negotiations.
“That cargo will not return to the West Coast until after a contract is final and approved by both parties,” the letter noted. “The longer there is no ratified contract only increases the probability that some portion of the freight will never return to the West Coast ports. Businesses have already made their shipping decisions for the all-important peak shipping season, which will begin this summer. Even though cargo volumes have dropped, we continue to experience supply chain stress and challenges. While many continue to recover from pandemic related issues, the ongoing stress of inflation and economic uncertainty continues to impact supply chain stakeholders as well.”
As previously noted in LM, this is not the first time a contract between the organizations gone on following the end of an existing contract. And one does not have to go too far back to see how acrimonious negotiations were, as in 2015, in the months prior to the June 30 deadline, it required the U.S. Federal Mediation and Conciliation Service to step in to help the sides find a way to come to an agreement over stalled labor negotiations. What’s more, the ongoing tension between the parties subsequently resulted in hindered productivity and also was a contributing factor in port congestion on the West Coast, especially as it led up to the 2016 holiday season.
The PMA said, at the time, that the state of terminal productivity at the five largest West Coast ports was approaching gridlock, due in large part to what it labeled ILWU-staged shutdowns.
While the one-year mark of the current deal having expired is coming up, there appears to be some positive signs of progress, at the same time. This progress would be welcomed, at a time when supply chain and global trade activity continue to see myriad ebbs and flows, a situation which has been the case going back to the onset of the pandemic.