By Laura Curtis, Mar 26, 2022 (Bloomberg) –Los Angeles Mayor Eric Garcetti said he expects labor talks to be resolved without significant disruption to the biggest U.S. ports — and an already stressed supply chain — as West Coast dockworkers’ contracts expire this summer.
The negotiations could start as early as next month between International Longshore and Warehouse Union, representing about 15,000 West Coast dockworkers, and the Pacific Maritime Association, made up of roughly 70 companies at 29 ports in the region.
The stakes are high, as the twin ports of Los Angeles and Long Beach are just starting to clear historic backlogs created by pandemic-induced supply chain disruptions. The current labor contract expires July 1.
“We’ve gone through enough shocks to the system,” the mayor said in an interview Friday at City Hall. “We have enough work to do and we have enough capital this time that we should be able to resolve these issues.”
Garcetti said he’s optimistic the two sides will be able to see eye-to-eye, especially considering the amount of cash ocean carriers have to work with this time around, and what he called the labor union’s “reasonable ask” on wages, pensions and health care.
“These companies have never made more money,” said Garcetti, sitting next to a display of a model cargo ship from France’s CMA CGM SA, one of the world’s biggest container lines. Freight carriers, which posted record profits last year, unloaded more than 40% of containerized goods coming into the U.S. at the San Pedro Bay ports.
“There are reasonable things that the unions are asking for,” he added. “If they can see that common ground and do it sooner than later — let’s make sure this isn’t one of those ones that skids over July 1.”
Garcetti said he has offered to help with shuttle diplomacy and said he has a good track record of bringing people together in labor disputes across Los Angeles. The White House has also brought in Transportation Secretary Pete Buttigieg and Labor Secretary Marty Walsh from the start, he said.
“We’ve been seeding the ground” ahead of the talks, Garcetti said.
There’s a lot on the line. Two years of record consumer spending have seen cargo loads hammer ports with delays and congestion, and workers are seen as having additional leverage. While wages and benefits loom large on labor’s agenda, the employers’ right to automate is set to emerge as a particularly thorny issue.
In the last round of contract talks that began in 2014, disagreements dragged on for nine months, creating an economic headwind across the country, a long line of waiting vessels and shortages of some consumer goods.
The disruptions only came to an end when the White House got involved and, according to an analysis by Copenhagen-based Sea-Intelligence, it took the shipping industry eight to nine months after a deal was reached in February 2015 to return to normal service.
Originally set to end in 2019, the contracts were extended for three more years after roughly two-thirds of union members voted to lengthen them to avoid cargo disruptions in exchange for higher wages and pensions. The ILWU declined an offer from the PMA last fall to extend the contracts for another year.
© 2022 Bloomberg L.P.
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